Svm Uk Emerg Regulatory News (SVM)

19 Jun 2006 15:12

PRESS RELEASE19 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 EndsFor further information, please contact:Donald Robertson SVM Asset Management 0131 226 6699Roland 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 yearI am delighted to report that the Fund had a successful period for the year to31 March 2006. The Fund's net asset value increased by 40.8% to 49.45 pence pershare, 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 assetvalue has increased by 64.1% against a benchmark rise of 39.5%.As intimated previously, the investment remit now encourages the Managers toinvest the Fund principally in companies listed on the Alternative InvestmentMarket (AIM) but also have up to 20% of the Fund invested in other securitiesand instruments. Due to the popularity of the AIM market since its nadir in2003, this stance has served the Fund well. The restructuring of the portfoliois virtually complete with over 80% of the Fund now invested in a range of AIMcompanies.The Fund has positions in approximately forty companies across a wide range ofindustries. Although there have been a recent deluge of new issues, theManagers prefer to concentrate on existing more mature businesses. Undoubtedly,short term profits have been foregone with this philosophy, however thebenefits of a longer term emphasis will produce a portfolio with morefavourable risk reward characteristics.The Fund still retains a small number of legacy OFEX holdings purchased priorto the remit change; the majority have either been realised during the year orhave been promoted on to AIM. Companies in the latter category have seengreater liquidity in their shares and are now easier to realise, whereappropriate. In addition, the Fund held as part of the original portfolio anumber of unlisted investments from early on in its life. Two companies havesurvived the adverse conditions experienced post 2001. Although both appear tobe trading well, it is unlikely that either will have a material impact on theportfolio and exit opportunities are being sought.Accounting StandardsThe Company prepares its financial statements under UK Generally AcceptedAccounting Practice and the AITC's 2005 Statement of Recommended Practice. YourBoard, following discussions with the Secretaries and the auditors, resolvednot to adopt International Financial Reporting Standards (IFRS). In yourBoard's view, there would be no material change in the financial results andposition of the Fund were it to adopt IFRS. The Board will, of course, keepthis matter under review.However, these financial statements do incorporate three new accountingstandards that were released by the UK Accounting Standards Board: FinancialReporting Standards (FRS) 21 `Events after the Balance Sheet Date', FRS 25`Financial Instruments: Disclosure and Presentation' and FRS 26 `FinancialInstruments: Measurement'. The principal one is the change in valuation of theFund's fixed asset investments. Where previously investments were valued on amiddle market basis, investments are now valued on a bid basis. Comparativefigures for 2005 have been restated to reflect the adoption of these standards.Further information regarding these accounting treatments is provided in thenotes to the financial statements.OutlookAlthough it is pleasing to note that stockmarkets have recovered from the postbubble corrections experienced at the beginning of this decade, it would beunwise to expect markets to continue to perform as strongly going forward.However, the Fund is positioned across a number of sectors which are wellplaced to benefit from the favourable economic conditions. The portfolio isinvested in companies that exhibit higher than average growth potential and arestill modestly valued. The Board and the Managers believe that the Fund, withits focus on UK smaller companies, should extend the recent out-performance andis well placed to deliver long term capital growth.Peter DicksChairman16 June 2006Summarised 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 417unrealised depreciation on investments ------- ------- ------- ------- ------- ------- Gains /(losses) - 875 875 - 109 109on investments Income 3 - 3 2 - 2 Investment - - - - - -management fees Other expenses (60) (8) (68) (66) (9) (75) ------- ------- ------- ------- ------- ------- Return before (57) 867 810 (64) 100 36interest and taxation Bank overdraft (28) - (28) (1) - (1)interest ------- ------- ------- ------- ------- ------- Transfer (from) / (85) 867 782 (65) 100 35to reserves ------ ------- ------- ------- -------- ------- Return per (1.56p) 15.88p 14.32p (1.19p) 1.83p 0.64pordinary share As at As at 31 March 31 March 2006 2005 (restated) ‚£'000 ‚£'000 Unaudited Balance Sheet Investments at fair value through 2,616 2,030profit 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) ------- -------Notes1. The results have been prepared in accordance with applicable accountingstandards and the 2005 Statement of Recommended Practice (SORP) issued by theAssociation of Investment Trust Companies. In addition, these resultsincorporate three changes to accounting practices: Financial ReportingStandards (FRS) 21 `Events after the Balance Sheet Date', FRS 25 `FinancialInstruments: Disclosure and Presentation' and FRS 26 `Financial Instruments:Measurement'. In accordance with FRS26, the fixed asset investments arecategorized as "fair value through profit or loss". Comparative figures havebeen 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 onthe total return for the year of ‚£782,000 (2005 - ‚£35,000). Capital return pershare 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 theyear of ‚£85,000 (2005 - ‚£65,000). The number of shares in issue at 31 March2006 was 5,460,000 (2005 - same).3. Due to the size of the Company, the Investment Managers waived their feesfor the year to 31 March 2005 and 2006.4. The above figures do not constitute full accounts in terms of Section 240 ofthe 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, onwhich the auditors issued an unqualified report, have been lodged with theRegistrar of Companies. The annual report and accounts will be mailed toshareholders and will be lodged with the Registrar of Companies during June2006. Copies will be available for inspection at 7 Castle Street, Edinburgh EH23AH, the registered office of the Company.ENDSVM UK EMERGING FUND PLC