Svm Uk Emerg Regulatory News (SVM)

SVM UK EMERGING FUND PLC (the "Fund") ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2014 The Board is pleased to announce the Annual Financial Results for the yearended 31 March 2014. The full Annual Report and Financial Statements, Notice ofAnnual General Meeting and Form of Proxy will be posted to shareholders and beavailable shortly on the Manager's website at www.svmonline.co.uk Copies of the Annual Report have been submitted to the National StorageMechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/nsm HIGHLIGHTS Strong outperformance against benchmark index over the year Net asset value total return was +37.2% for the year compared to +17.1% for thebenchmark index Share price rise of +34.3% for the year New objective and benchmark index approved by shareholders during the year Re-alignment of portfolio focusing on more liquid, dividend-paying growthbusinesses Financial Highlights Year to Year to 31 March 31 March 2014 2013 Total Return performance: Net Asset Value total return +37.2% -24.6% Share Price total return +34.3% -21.8% Benchmark Index (IMA UK All Companies Sector +17.1% -7.3%Average Index since 1 October 2013*) 31 March 31 March % Change 2014 2013 Capital Return performance: Net asset value (p) 73.93 53.90 +37.2% Share price (p) 57.75 43.00 +34.3% FTSE All-Share Index 3,556 3,381 +5.2% Discount 21.9% 20.2% Ongoing Charges ratio: Investment management fees** - - Other operating expenses 1.6% 2.9% Total Return to 1 3 5 Remit Change Launch 31 March 2014 (%) Year Years Years 2004 (2000) Net Asset Value +37.2 -15.4 +65.3 +129.8 -23.8 Benchmark Index* +17.1 -3.5 +115.3 +1.3 -41.6 \* The benchmark index for the Fund was changed to the IMA UK All CompaniesSector Average Index from 1 October 2013 prior to which the FTSE AIM Index wasused. *\* The Manager has waived its management fees for the year to 31 March 2014 and2013. INVESTMENT OBJECTIVE The investment objective of the Fund is long term capital growth frominvestments in smaller UK companies. Its aim is to outperform the IMA UK AllCompanies Sector Average Index on a total return basis. CHAIRMAN'S STATEMENT Over the 12 months to 31 March 2014, the net asset value per share increased by37.2% to 73.93p, compared to a gain of 17.1% in the benchmark. The benchmarkwas changed with effect from 1 October 2013 to the IMA UK All Companies SectorAverage Index, following a shareholder vote. For the year under review, thebenchmark comparison is with the previous index to 30 September 2013, and thenew benchmark subsequently. Over the 12 months, the share price gained 34.3%. Performance was helped by maintaining a fully invested position, in expectationof a strong recovery by the UK economy. Over the past year, the UK economysteadily strengthened, with notable recovery in housing that broadened intoother consumer and services sectors, making it one of the fastest growingWestern economies. In my Statement last year, I commented on the toughfinancing environment for smaller companies and I am pleased to report theposition has markedly improved since. The emphasis of the portfolio onbusinesses in the UK consumer sector, and property and technology has alsoassisted performance. Review of the year Last year, the portfolio was re-aligned to emphasise businesses with anexposure to global growth or the potential to progress by a degree ofinnovation and self-help. Many of these businesses have performed well over thepast year, as consumer confidence returned and credit conditions eased. Overthe 12 month period, there were good contributions to performance from TedBaker, Thomas Cook, Mar City, Sports Direct and ASOS. These businessesbenefited from strengthening consumer confidence and effective management.Property businesses in the portfolio also contributed, including GraingerTrust, Workspace Group and Unite Group. Computer aided design business,Delcam, attracted a takeover bid which achieved a good profit for the Fund. Asmerger and acquisition activity recovers, some of the portfolio businessescould be attractive targets for international groups. The main disappointmentsduring the year were defence group Manroy, and Hurricane Energy. Both of theseinvestments were sold. Sales were also made of other unquoted investments, andthe Hydrodec loan stock was repaid. This means that the portfolio now includesjust one unquoted investment, Claremont Partners, representing 2.4% of theFund's net asset value. Consumer services - including retailers, media, travel and pub groups - gainedfrom a recovery in pay levels and house prices, boosting consumer confidence.The Fund continues to have relatively low exposure to sectors with weakergrowth prospects, such as utilities, oil and mining. Despite some goodperformance in the banking sector, we anticipate returns to disappoint ascapital is rebuilt, and our exposure to this sector remains low Despite the recovery in pay levels, there are still constraints on UK consumerspending. However, a number of retail and leisure businesses have re-focusedand are being helped by lower competition. The portfolio emphasises businesseswith a specialisation or other competitive advantage that helps growth, andstable profit margins. With low financing costs, businesses such as JohnsonService Group, Thomas Cook, ITV and Trinity Mirror Group, can pay down debt,restructure or participate in merger and acquisition activity to enhanceearnings. We expect continued stimulus for the UK economy, particularly inhouse building and small business lending, encouraging growth in the regions.Additional measures to address the risk of deflation are also likely. Equity valuations are attractive relative to other asset classes. Overall, theglobal economy continues to grow, offering a favourable background forequities. Central Bank policy in both the UK and Eurozone is now focused onmaintaining low interest rates and assisting the bank sector. Returns on cashdeposits and bonds will remain very low, and so equities that offer growth andattractive dividend yields are being sought by investors. Your Board continues to work to improve liquidity in the Fund's shares. Webelieve that the improved underlying portfolio liquidity should help tomaintain a lower discount. This will be kept under review. Outlook The Fund's portfolio emphasises growing small and medium sized businesses. TheFund is positioned to benefit from continued recovery in the UK economy,focused on attractive equity valuations. Its aim remains to deliver long termcapital growth, lower volatility and superior absolute and relative returns.The Board and the Manager believe that it is well placed to continue to deliveron these aims. Alternative Investment Fund Managers Directive The Board has considered the implications of the Alternative Investment FundManagers Directive. Recognising the size of the Fund, and the relativesimplicity of its structure and investment objective, the Board has concludedthat the Fund should seek authorisation as an internally managed AlternativeInvestment Fund, where the Board act as a Small Registered UK AlternativeInvestment Fund Manager. This will involve registration with the FinancialConduct Authority. Risk management and portfolio management activities will bedelegated to the current manager, SVM Asset Management, with appropriate Boardoversight measures put in place. Peter Dicks Chairman 4 July 2014 MANAGER'S REVIEW Summary Following re-alignment of the portfolio in late 2012, the year under review sawthe changes bear fruit. The re-investment into businesses with superior growthprospects, lower risk and greater liquidity, assisted performance. This washelped by a sharp recovery in the UK economy, beating expectations and helpingconsumer sectors in particular. The portfolio also had low exposure to areassuch as mining that were adversely impacted by stresses in emerging marketsthat were a feature of 2013. Over the 12 months, the portfolio emphasised retailers, technology,industrials, business services and property. The relatively small size of theFund affords portfolio flexibility, and allows investment to be made in growingbusinesses. The Fund includes companies in AIM, smaller companies and mediumsized businesses, but has low exposure to the very smallest businesses. Thereis also no investment in the very largest FTSE 100 companies, which typicallyhave lower growth, and are now more challenged by disinflation. The investmentprocess involves fundamental research via company meetings, combined with theidentification of a catalyst to achieve recognition of value. Within SVM AssetManagement, Colin McLean and Margaret Lawson continue to have day-to-dayresponsibility for the investment management of the Fund. Contributors to performance The most significant contributions to performance came from the consumersector, including travel and retail. Two businesses with strong brands andexpanding footprint, Ted Baker and SuperGroup, performed well as the marketrecognised growth prospects. Strong brands offer some protection againstdeflationary pressure, and both these businesses have growth strategies withgood management. Thomas Cook gained as new management continued to restructurethe business, and succeeded in raising new capital, reducing risk. SportsDirect also rose as its UK competition was much reduced, and it made progresswith its expansion plans in Europe. The property investments in the portfolio - Grainger, Quintain Estates,Workspace and Unite - focus on effective management teams, typically focusingon niches or other specialisation. These progressed as yields remained low,making returns from property attractive, and the bank sector resolved somelegacy property problems. Grainger is a residential property company andQuintain focuses on London commercial and residential real estate. Workspaceprovides tailored business premises for early stage businesses in London, andUnite specialises in student residential accommodation throughout the UK. Webelieve the sector offers further growth potential. The Fund also has above average exposure to technology, including businessesspecialising in computer aided design, big data and cloud services. Computeraided design company, Delcam, accepted a bid in January 2014 from US softwaregroup, Autodesk. With high business taxation in the US, many Americanheadquartered corporations are looking to make related acquisitions overseas,and we believe this will encourage more bids for UK technology companies. Unquoteds Portfolio exposure to unquoted investments has been steadily reduced. The yearunder review opened with three holdings representing more than 15% of theFund. In October 2013, the unsecured loan stock of Hydrodec Group was repaidin full. It paid an 8% coupon, providing income to the Fund. However,dividends within the listed investments in the portfolio are growing.Hurricane Energy was sold after it listed early in 2014. The remainingunquoted investment, Claremont Partners, represents 2.4% of the Fund, and isvalued at a 15% discount to cost. Claremont has gaming licence applications inthe US, and also owns land in Taiwan. The Managers do not plan to make any newunquoted investments in the current year. Portfolio Changes The consumer and property investments reported earlier represent core portfolioholdings, along with a number of industrial and business services investmentsexposed to the recovering global economy. A number of changes have been madeto the portfolio in 2014, to take profits in some smaller company holdings thathad performed particularly strongly, and re-invest in a number of medium sizedcompanies at attractive valuations. New investments include St James Place,Hargreaves Lansdown and Whitbread. Outlook Recovery in the US, Eurozone and UK continues to exceed most forecasts. The IMFgrowth forecast for the UK this year of 2.9% is the highest of any advancedeconomy. Many UK-listed international companies are also benefiting from therecovery in the global economy. The Pound was strong during the year, helped by economic recovery, with marketsbelieving that further stimulation might be deferred. However, inflationremains extremely low and is running below the Bank of England's 2% target. Ifthis persists, further stimulation is likely. A number of portfolioinvestments should gain from stimulation in Europe. There is also someindirect exposure to the US economy, which continues to recover. We believethere is also potential for recovery globally in capital investment, and anumber of portfolio companies should benefit as business confidence grows. Your Fund remains fully invested, reflecting the potential for dividend growth,share re-ratings, and for self-help in many portfolio companies. The portfolioemphasises consumer sectors, property, technology and business services.Overall, a strengthening UK economy and the prospect of growth in the globaleconomy offer a favourable background for UK equities. Market Capitalisation* Sector analysis* % Listing* % % Consumer Services AIM 30.1 Small 59.6 Industrials 36.1 Unquoted 2.1 Mid 32.8 Financials 21.4 Main Market 67.8 Large 7.6 Consumer Goods 17.4 Technology 14.5 Health Care 8.2 Oil & Gas 2.1 0.3 *Analysis is of net exposure after hedging INVESTMENT PORTFOLIO as at 31 March 2014 Stock Cost Valuation % of Valuation 2014 2014 Net Assets 2013 £000 £000 £000 1 Ted Baker 93 215 4.8 130 2 Unite Group 120 178 4.0 163 3 Thomas Cook 85 172 3.9 76 4 ITV Television 60 163 3.7 75 5 ASOS 90 155 3.5 - 6 Workspace 66 145 3.3 83 7 Grainger Trust 82 145 3.3 81 8 Sports Direct 62 128 2.9 64 9 Johnson Services 81 127 2.9 87 10 Telford Homes 88 120 2.7 - Ten largest investments 827 1,548 35.0 11 Benchmark Holdings 70 107 2.4 - 12 Hays 76 107 2.4 53 13 Claremont Partners Ltd* 125 106 2.4 106 14 RPS Group 103 103 2.3 - 15 Photo-Me International 109 100 2.3 - 16 GVC Holdings 66 98 2.2 69 17 Quintain Estates 62 97 2.2 63 18 Playtech 59 95 2.1 88 19 Convivality Retail 84 94 2.1 - 20 Mears Group 72 94 2.1 - Twenty largest investments 1,653 2,549 57.5 21 Mar City 49 88 2.0 - 22 XAAR 81 88 2.0 - 23 Fusionex International 81 81 1.8 - 24 Tribal Group 37 77 1.7 98 25 M&C Saatchi 66 77 1.7 - 26 Ryanair 70 77 1.7 - 27 DSG International 31 69 1.6 47 28 Iomart Group 71 64 1.4 - 29 Pace 36 63 1.4 - 30 Numis Corporation 53 62 1.4 - Thirty largest investments 2,228 3,295 74.2 Other investments (39 holdings) 1,297 1,126 25.4 Total investments 3,525 4,421 99.6 Net current assets 18 0.4 Net Assets 4,439 100.0 Investments are UK equity listed investments except those marked with anasterisk which are unlisted. Further information is given in note 5 to thefinancial statements. A full portfolio listing as at 31 March 2014 is detailedon the website. PRINCIPAL RISKS AND UNCERTAINTIES The Directors review policies for identifying and managing the principal risksfaced by the Fund. Many of the Fund's investments are in small companies and may be seen ascarrying a higher degree of risk than their larger counterparts. These risksare mitigated through portfolio diversification, in-depth analysis, theexperience of the Manager and a rigorous internal control culture. Furtherinformation on the internal controls operated for the Fund is detailed in theReport of the Directors. The principal risks facing the Fund relate to the investment in financialinstruments and include market, liquidity, credit and interest rate risk. Anexplanation of these risks and how they are mitigated is explained in note 9 tothe financial statements. Additional risks faced by the Fund are summarisedbelow: Investment strategy - The risk that an inappropriate investment strategy maylead to the Fund underperforming its benchmark, for example in terms of stockselection, asset allocation or gearing. The Board have given the Manager aclearly defined investment mandate which incorporates various risk limitsregarding levels of borrowing and the use of derivatives. The Manager investsin a diversified portfolio of holdings and monitors performance with respect tothe benchmark. The Board regularly reviews the Fund's investment mandate andlong term strategy. Discount - The risk that a disproportionate widening of discount in comparisonto the Fund's peers may result in loss of value for shareholders. The discountvaries depending upon performance, market sentiment and investor appetite. TheBoard regularly reviews the discount and the Fund operates a share buy-backprogramme. Accounting, Legal and Regulatory - Failure to comply with applicable legal andregulatory requirements could lead to a suspension of the Fund's shares, finesor a qualified audit report. In order to qualify as an investment trust theFund must comply with section 1158 of the Corporation Tax Act 2010 ("CTA").Failure to do so may result in the Fund losing investment trust status andbeing subject to Corporation Tax on realised gains within the Fund'sportfolio. The Manager monitors movements in investments, income andexpenditure to ensure compliance with the provisions contained in section 1158.Breaches of other regulations, including the Companies Act 2006, the ListingRules of the UK Listing Authority or the Disclosure and Transparency Rules ofthe UK Listing Authority, could lead to regulatory and reputational damage. TheBoard relies on the Manager and its professional advisers to ensure compliancewith section 1158 CTA, Companies Act 2006 and UKLA Rules. Operational - The risk of loss resulting from inadequate or failed internalprocesses, people and systems or from external events. Like most otherInvestment Trusts, the Fund has no employees and relies upon the servicesprovided by third parties. The Manager has comprehensive internal controls andprocesses in place to mitigate operational risks. These are regularlymonitored and are reviewed to give assurance regarding the effective operationof the controls. Corporate Governance and Shareholder Relations - Details of the Fund'scompliance with corporate governance best practice, including information onrelations with shareholders, are set out in the Directors' Statement onCorporate Governance. Financial - The Fund's investment activities expose it to a variety offinancial risks including market, credit and interest rate risk. These risksare explained in note 9 to the financial statements. The Board seeks tomitigate and manage these risks through continuous review, policy setting andenforcement of contractual obligations. The Board receives both formal andinformal reports from the Manager and third party service providers addressingthese risks. The Board believes the Fund has a relatively low risk profile asit has a simple capital structure; invests principally in UK quoted companies;does not use derivatives other than CFDs and uses well established andcreditworthy counterparties. The capital structure comprises only ordinary shares that rank equally. Eachshare carries one vote at general meetings. STATEMENT OF DIRECTORS' RESPONSIBILITIES The Directors consider that the Annual Report and Financial Statements, takenas a whole, is fair, balanced and understandable and provides the informationnecessary for shareholders to assess the Fund's performance, business model andstrategy. The Directors each confirm to the best of their knowledge that: • the financial statements, prepared in accordance with the applicableaccounting standards, on a going concern basis, give a true and fair view ofthe assets, liabilities, financial position and profit or loss of the Fund and; • the Annual Report and Financial Statements includes a fair review ofthe development and performance of the business and the position of the Fundtogether with a description of the principal risks and uncertainties that itfaces. • the Annual Report and Financial Statements includes details ofrelated party transactions, if any. By Order of the Board Peter Dicks Chairman 4 July 2014 Income statement for the year to 31 March 2014 Notes Revenue Capital Total £000 £000 £000 Net gain on investments at fair value throughprofit or loss 5 - 1,205 1,205 Income 1 83 - 83 Investment management fees - - - Other expenses 2 (62) (11) (73) Gain before finance costs and taxation 21 1,194 1,215 Finance costs (13) - (13) Gain on ordinary activities before taxation 8 1,194 1,202 Taxation 3 - - - Gain attributable to ordinary shareholders 8 1,194 1,202 Gain per Ordinary Share 4 0.14p 19.89p 20.03p for the year to 31 March 2013 Notes Revenue Capital Total £000 £000 £000 Net losses on investments at fair value 5 - (991) (991)through profit or loss Income 1 50 - 50 Investment management fees - - - Other expenses 2 (96) (12) (108) Loss before finance costs and taxation (46) (1,003) (1,049) Finance costs (6) - (6) Loss on ordinary activities before taxation (52) (1,003) (1,055) Taxation 3 - - - Loss attributable to ordinary shareholders (52) (1,003) (1,055) Loss per Ordinary Share 4 (0.86p) (16.71p) (17.57p) The Total column of this statement is the profit and loss account of the Fund.All revenue and capital items are derived from continuing operations. Nooperations were acquired or discontinued in the year. A Statement of TotalRecognised Gains and Losses is not required as all gains and losses of the Fundhave been reflected in the above statement. Balance sheet as at 31 March 2014 Notes 2014 2013 £000 £000 Fixed Assets Investments at fair value through profit or loss 5 4,421 3,248 Current Assets Debtors 6 48 14 Cash at bank and on deposit 58 186 Total current assets 106 200 Creditors: amounts falling due within one year 7 (88) (211) Net current assets 18 (11) Total assets less current liabilities 4,439 3,237 Capital and Reserves Share capital 8 300 300 Share premium 314 314 Special reserve 5,144 5,144 Capital redemption reserve 27 27 Capital reserve (733) (1,927) Revenue reserve (613) (621) Equity shareholders' funds 4,439 3,237 Net asset value per Ordinary Share 4 73.93p 53.90p Reconciliation of movements in shareholders' funds for the year to 31 March 2014 Share Share Special Capital Capital Revenue capital premium reserve redemption reserve reserve £000 £000 £000 reserve £000 £000 £000 As at 1 April 2013 300 314 5,144 27 (1,927) (621) Gain attributable toshareholders - - - - 1,194 8 As at 31 March 2014 300 314 5,144 27 (733) (613) For the year to 31 March 2013 Share Share Special Capital Capital Revenue capital premium reserve redemption reserve reserve £000 £000 £000 reserve £000 £000 £000 As at 1 April 2012 300 314 5,144 27 (924) (569) Loss attributable to - - - - (1,003) (52)shareholders As at 31 March 2013 300 314 5,144 27 (1,927) (621) Cash flow statement for the year to 31 March 2014 2014 2013 £000 £000 Reconciliation of gain before finance costs and taxation to netoperating cash flows Gain/(Loss) before finance costs and taxation 1,215 (1,049) (Gains)/Losses on investments (1,205) 991 Transaction costs 11 12 Movement in debtors (34) 1 Movement in creditors 13 (422) Net cash outflow from operating activities - (467) Taxation Taxation recovered - - Loss on investment and servicing of finance Finance costs (13) (6) Capital expenditure and financial investment Purchases of fixed asset investments (3,516) (3,198) Sales of fixed asset investments 3,401 3,011 (115) (187) Movement in cash (128) (660) Reconciliation of net cash flow to movement in net cash Movement in cash in the year (128) (660) Net cash as at start of the year 186 846 Net cash as at end of the year 58 186 Accounting policies Basis of preparation The financial statements are prepared in accordance with UK Generally AcceptedAccounting Practice (''GAAP'') and with the 2009 Statement of RecommendedPractice ''Financial Statements of Investment Trust Companies and VentureCapital Trusts'' (''SORP''). Income Income is included in the Income Statement on an ex-dividend basis. Income onfixed interest securities is included on an effective interest rate basis.Deposit interest is included on an accruals basis. Expenses and interest Expenses and interest payable are dealt with on an accruals basis. Investment management fees Investment management fees, if any, are allocated 100 per cent to capital. Theallocation is in line with the Board's expected long-term return from theinvestment portfolio. Due to the size of the Fund, the Manager has waived itsmanagement fee. The terms of the investment management agreement are detailedin the Report of the Directors. Taxation Deferred taxation is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date where transactions orevents that result in an obligation to pay more or a right to pay less tax inthe future have occurred at the balance sheet date measured on an undiscountedbasis and based on enacted tax rates. This is subject to deferred tax assetsonly being recognised if it is considered more likely than not that there willbe suitable profits from which the future reversal of the underlying timingdifferences can be deducted. Timing differences are differences arising betweenthe taxable profits and the results as stated in the financial statements whichare capable of reversal in one or more subsequent periods. Investments The investments have been categorised as ''fair value through profit or loss''.All investments are held at fair value. For listed investments this is deemedto be at bid prices as at 31 March 2014. Contracts for Differences aresynthetic equities and are valued with reference to the investment's underlyingbid prices. Unlisted investments are valued at fair value based on the latestavailable information and with reference to International Private Equity andVenture Capital Valuation Guidelines. All changes in fair value and transaction costs on the acquisition and disposalof portfolio investments are included in the Income Statement as a capitalitem. Purchases and sales of investments are accounted for on trade date. Capital reserve Gains and losses on realisations of fixed asset investments, and transactionscosts, together with appropriate exchange differences, are dealt with in thisreserve. All incentive fees and investment management fees, together with anytax relief, is also taken to this reserve. Increases and decreases in thevaluation of fixed asset investments are dealt with in this reserve. Notes to the financial statements 1. Income Income from UK listed shares and securities 2014 2013 £000 £000 - dividends 63 34 - interest 20 16 83 50 2. Other expenses Revenue General expenses 30 39 Directors' fees† 18 22 Auditor's remuneration audit services 12 23 taxation services 2 12 62 96 † The Directors' fees in respect of the year ended 31 March 2013 were £18,000.The figure for 2013 includes an adjustment for an under accrual at 31 March2012 of £4,000. Capital Transaction costs - acquisitions 5 6 - disposals 6 6 11 12 3. Taxation Current taxation - - Deferred taxation - - Total taxation for the year - - Gain/(Loss) on ordinary activities before taxation 1,202 (1,055) The tax assessed for the year is different from the standard small company rateof corporation tax in the UK. The differences are noted below: Corporation tax (20%, 2013 - 20%) 240 (211) Non taxable UK dividends (13) (7) Non taxable investment gains/(losses) in capital (239) 201 Movement in unutilised management expenses and NTLR deficits 12 17 Total taxation charge for the year - - At 31 March 2014, the Fund had unutilised management expenses and non tradeloan relationship ("NTLR") deficits of £900,000 (2013 - £850,000). A deferred tax asset of £180,000 has not been recognised on the unutilisedmanagement expenses as it is unlikely that there would be suitable taxableprofits from which the future reversal of the deferred tax asset could bededucted. 4. Returns per share Returns per share are based on a weighted average of 6,005,000 (2013 -6,005,000) ordinary shares in issue during the year. Total return per share is based on the total gain for the year of £1,202,000(2013 - loss of £1,055,000). Capital return per share is based on the net capital gain for the year of £1,194,000 (2013 - loss of £1,003,000). Revenue return per share is based on the revenue gain after taxation for theyear of £8,000 (2013 - loss of £52,000). The net asset value per share is based on the net assets of the Fund of £4,439,000 (2013 - £3,237,000) divided by the number of shares in issue at theyear end as shown in note 8. 5. Investments at fair value through profit or loss 2014 2013 £000 £000 Listed investments 4,315 3,062 Unlisted investments 106 186 Valuation as at end of year 4,421 3,248 Listed Unlisted Total £000 £000 £000 Valuation as at start of year 3,052 196 3,248 4,064 Investment holding losses as at start of year (216) (391) (607) (1,175) Cost as at start of year 3,268 587 3,855 5,239 Purchases of investments at cost 3,366 - 3,366 3,192 Proceeds from sale of investments (3,372) (34) (3,406) (3,017) Transfers - - - - Net loss on sale of investments (222) (68) (290) (1,559) Cost as at end of year 3,040 485 3,525 3,855 Investment holding gains/(losses) as at end 1,275 (379) 896 (607)of year Valuation as at end of year 4,315 106 4,421 3,248 Net losson sale of investments (222) (68) (290) (1,559) Movement in investment holding gains 1,497 (2) 1,495 568 Total gain/(loss) on investments 1,275 (70) 1,205 (991) 6. Debtors 2014 2013 £000 £000 Investment income due but not received 4 6 Amounts receivable relating to CFDs 37 - Taxation 7 8 48 14 7. Creditors: amounts falling due within one year 2014 2013 £000 £000 Amounts due relating to CFDs 8 164 Other creditors 80 47 88 211 8. Share capital Authorised 100,000,000 ordinary 5p shares (2013 - same) 5,000 5,000 Allotted, issued and fully paid 6,005,000 ordinary 5p shares (2013 - same) 300 300 As at the date of publication of this document, there was no change in theissued share capital and each ordinary share carries one vote. 9. Financial instruments Risk Management The Fund's investment policy is to hold investments, CFDs and cash balanceswith gearing being provided by a bank overdraft. All financial instruments aredenominated in Sterling and are carried at fair value. The fair value is thesame as the carrying value of all financial assets and liabilities. Whereappropriate, gearing can be utilised in order to enhance net asset value. Itdoes not invest in short dated fixed rate securities other than where it hassubstantial cash resources. Fixed rate securities held at 31 March 2014 werevalued at £nil (2013 - £250,000). Investments, which comprise principallyequity investments, are valued as detailed in the accounting policies. The major risks inherent within the Fund are market risk, liquidity risk,credit risk and interest rate risk. It has an established environment for themanagement of these risks which are continually monitored by the Manager.Appropriate guidelines for the management of its financial instruments andgearing have been established by the Board of Directors. It has no foreigncurrency assets and therefore does not use currency hedging. It does not usederivatives within the portfolio with the exception of CFDs. Market risk The risk that the Fund may suffer a loss arising from adverse movements in thefair value or future cash flows of an investment. Market risks include changesto market prices, interest rates and currency movements. The Fund invests in adiversified portfolio of holdings covering a range of sectors. The Managerconducts continuing analysis of holdings and their market prices with anobjective of maximising returns to shareholders. Asset allocation, stockselection and market movements are reported to the Board on a regular basis. Liquidity risk The risk that the Fund may encounter difficultly in meeting obligationsassociated with financial liabilities. The Fund is permitted to invest inshares traded on AIM or similar markets; these tend to be in companies that aresmaller in size and by their nature less liquid than larger companies. TheManager conducts continuing analysis of the liquidity profile of the portfolioand the Fund maintains an overdraft facility to ensure that it is not a forcedseller of investments. Credit risk The risk that the counterparty to a transaction fails to discharge itsobligation or commitment to the transaction resulting in a loss to the Fund.Investment transactions are entered into using brokers that are on theManager's approved list, the credit ratings of which are reviewed periodicallyin addition to an annual review by the Manager's board of directors. TheFund's principal bankers are State Street Bank & Trust Company, the main brokerfor CFDs is UBS and other approved execution broker organisations authorised bythe Financial Conduct Authority. Interest rate risk The risk that interest rate movements may affect the level of income receivableon cash deposits. At most times the Fund operates with relatively low levelsof gearing, this has and will only be increased where an opportunity exists tosubstantially add to the net asset value performance. 10. The financial information contained within this announcement does notconstitute statutory accounts as defined in sections 434 and 435 of theCompanies Act 2006. The results for the years ended 31 March 2014 and 2013 arean abridged version of the statutory accounts for those years. The Auditor hasreported on the 2014 and 2013 accounts, their reports for both years wereunqualified and did not contain a statement under section 498 of the CompaniesAct 2006. Statutory accounts for 2013 have been filed with the Registrar ofCompanies and those for 2014 will be delivered in due course. 11. The Annual Report and Accounts for the year ended 31 March 2014 willbe mailed to shareholders shortly and copies will be available from theManager's website www.svmonline.co.uk and the Fund's registered office at 7Castle Street, Edinburgh, EH2 3AH. The Annual General Meeting of the Fund will be held at 9.30am onFriday 12 September 2014 at 7 Castle Street, Edinburgh, EH2 3AH. For further information, please contact: Colin McLean SVM Asset Management0131 226 6699 Roland Cross Broadgate Mainland0207 726 6111

4 July 2014