Statement re Proposed Merger

RNS Number : 8183H
Standard Life UK Small.Co's Tst PLC
10 November 2008

Standard Life UK Smaller Companies Trust plc
Proposed merger with Gartmore Smaller Companies Trust plc

10 November 2008

The Boards of Standard Life UK Smaller Companies Trust plc ('SLS') and Gartmore Smaller Companies Trust plc ('Gartmore Smaller')
announce that they have reached agreement in respect of a merger of the assets of the two companies to be effected through a scheme of
reconstruction and winding-up of Gartmore Smaller (the 'Scheme'). The Scheme will be subject to, amongst other things, the approval of both
companies' shareholders at general meetings, which will be held in the next few months. Under the Scheme, SLS will be the continuing company
and Gartmore Smaller's continuing shareholders will be issued with new shares in the capital of SLS.

Standard Life Investments Limited ('SLI') will remain the manager of the enlarged company.

SLS is making this announcement with the approval of Gartmore Smaller.

Structure of the Scheme

Under the Scheme, if approved by shareholders in both companies:

* Gartmore Smaller will be put into members' voluntary liquidation and its business and assets split into two funds in respect of the
interests of continuing shareholders (the 'continuation fund') and exiting shareholders (the 'realisation fund') on the basis described
below;

* SLS will issue new continuation shares to Gartmore Smaller shareholders wishing to remain invested in the enlarged company in exchange
for the transfer to it of the assets comprised in the continuation fund;

* exiting Gartmore Smaller shareholders will retain their shares in Gartmore Smaller and receive cash distributions out of the
realisation fund;

* larger shareholders holding in excess of 10 per cent. of Gartmore Smaller's shares will be offered an in specie distribution;

* Gartmore Smaller shareholders will be entitled to elect to receive either continuation shares issued by SLS and/or a cash exit in
respect of their investment in Gartmore Smaller, subject to the cash exit elections not exceeding 35 per cent. of Gartmore Smaller's total
issued shares, excluding any shares elected for the in specie option; and

* qualifying Gartmore Smaller shareholders electing for the in specie option will be entitled to receive up to 100 per cent. of their
interest in Gartmore Smaller in specie.

The assets of Gartmore Smaller will be split pro rata to each fund in proportion to the respective elections save that an exit charge of
3 per cent. will be deducted from the realisation fund, and from any in specie distribution, and credited to the continuation fund towards
the costs of the Scheme.

Both funds will be managed by SLI. Assets in the realisation fund will be realised over a period of up to 12 months and quarterly
distributions will be made to realisation fund shareholders. Assets in the continuation fund will be realigned in accordance with the SLS
investment policy over a period of up to 12 months and continuation shares will be converted into new SLS ordinary shares quarterly as the
realignment process progresses. SLI will be required to dispose of assets in the realisation fund and the continuation fund on the same
terms and at the same time.

The continuation shares will be listed, subject to satisfying the requirements for listing of the listing rules of the UK Listing
Authority

Standard Life Investments' commitment

In connection with the Scheme, SLI has agreed to reduce its annual investment management fee over the enlarged SLS to 0.65 per cent. per
annum and introduce a performance fee after conversion of all of the continuation shares. The performance fee will be payable if SLS
out-performs its benchmark by at least 1 per cent. per annum. The amount of the performance fee will be 20 per cent. per annum of the
enlarged SLS' outperformance above 1 per cent. over its benchmark, capped at 0.6 per cent. per annum of the gross assets of SLS. The
performance fee will be subject to protections in respect of any underperformance.

SLI has agreed to make a contribution to the costs of the Scheme equal to its management fee on the continuation fund for a period of up
to 9 months, calculated on the value of the continuation fund immediately following the implementation of the Scheme, which is expected to
be paid by means of a management fee waiver.

SLI intends to maintain a significant interest on behalf of its clients in the enlarged SLS of up to 15 per cent. of the issued share
capital following implementation of the Scheme. In principle, SLI has indicated that it would be prepared to acquire shares in Gartmore
Smaller through the market prior to the Scheme becoming effective. Any such purchases would be made at prevailing market prices and would be
expected to be made at a 15 per cent. or wider discount to the published net asset value per share.

Discount policy for the enlarged SLS

The Board of SLS intends to seek authority from shareholders at each annual general meeting to introduce a share redemption facility, to
commence approximately 18 months following the Scheme becoming effective, to allow SLS to purchase up to 10 per cent. of its issued shares
per annum at a discount of 2 per cent. to realisation value. The share redemption facility will be available on a 6 monthly basis with any
excess from the first 6 monthly share redemption in any year available to be applied towards the share redemption in the second half of that
year. Unused share redemptions of up to 5 per cent. of SLS's issued shares in any year will be carried forward to the next year and
therefore a maximum of 15 per cent. could be available in any year, subject to the carry forward being available.

The Board of SLS will also aim to use its annual 14.99 per cent. share buy-back authority to maintain a discount level of less than 10
per cent. on the enlarged SLS ordinary shares under normal market conditions.

Direct costs and expenses

The Scheme will not cause asset dilution for SLS shareholders. The direct costs of the Scheme are estimated to be approximately �1
million (excluding portfolio realignment costs and stamp duty).

Board

Following the completion of the Scheme, two directors of Gartmore Smaller will join the board of the enlarged SLS. Donald MacDonald,
chairman of SLS, will remain chairman of the enlarged SLS. Neil Dunn, one of the SLS directors, has indicated his intention to resign as a
director with effect from completion of the Scheme. The board of the enlarged SLS will therefore comprise five directors.

Support

The board of SLS has consulted with its major shareholders, holding in aggregate approximately 55 per cent. of SLS's issued share
capital, who have all indicated their intention to vote in support of the Scheme.

The board of Gartmore Smaller has consulted with its major shareholders, holding in aggregate approximately 60 per cent. of Gartmore
Smaller's issued share capital, who have all indicated their intention to vote in support of the Scheme and the majority of whom will
continue with a significant investment in the enlarged SLS.

Benefits of the Scheme

The Board of SLS believes that the Scheme represents an excellent opportunity for SLS to attract new shareholders and to increase the
size of SLS significantly in a cost efficient manner. The main benefits of the Scheme for SLS shareholders are that:

(i) they will have an investment in an enlarged SLS:
* with a larger asset base; and
* with a reduced basic management fee arrangements;

(ii) by increasing the gross assets of SLS, the Board is able to introduce a regular redemption facility; and

(iii) the Scheme will not be dilutive to SLS shareholders.

Expected timetable

SLS and Gartmore Smaller expect to publish documents in connection with the implementation of the Scheme during December 2008 to enable
shareholders' approval to be obtained in January 2009. It is expected that final conversion of the continuation shares would be made in
late January 2010. Completion of the Scheme will also be subject to the receipt of all necessary regulatory approvals and tax clearances.

Enquiries:

Gordon Humphries
Standard Life Investments Limited
0131 245 2735

Douglas Armstrong
Dickson Minto W.S.
020 7649 6823

Dickson Minto W.S., which is authorised and regulated by the Financial Services Authority, is acting for SLS and for no-one else in
connection with the contents of this announcement and will not be responsible to anyone other than SLS for providing the protections
afforded to clients of Dickson Minto W.S., or for affording advice in relation to the contents of this announcement or any matters referred
to herein.

Winterflood Investment Trusts, which is authorised and regulated by the Financial Services Authority, is acting for Gartmore Smaller and
for no-one else in connection with the contents of this announcement and will not be responsible to anyone other than Gartmore Smaller for
providing the protections afforded to customers of Winterflood Investment Trusts, or for affording advice in relation to the contents of
this announcement or any matters referred to herein.

This information is provided by RNS
The company news service from the London Stock Exchange

END

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