A Standard Life Investments presentation 12 September 2007 This communication is intended for investment professionals only and must not be relied on by anyone else. Smaller Companies: Reasons to keep the faith

2 Harry Nimmo Investment Director Head of UK Smaller Companies Where now for Smaller Companies? Buying tomorrow’s smaller companies today

3 Current definitions Alternative Investment Market Sector exposure – Hoare Govett Sector exposure – AIM UK & USA Small Cap relative performance Valuations & Growth Smaller Companies transformed Growth themes Where now for Smaller Companies? Reasons to keep the faith

4 Full List Market Source: LSE, Investec, 03 June % 100% 92% 97% 44% ,100 38,000 0% 132,100 Hoare Govett Smaller Companies Index FTSE250 FTSE100 Market Cap (£m) % Rank Drax Hiscox QXL Agcert Intl BP 81% 3,500 Rio Tinto 10 FTSE All Share FTSE Smallcap

5 Alternative Investment Market (AIM) 100% 84% 48% % 1,259 Market Cap (£m) % Rank CPL Resources Intercytex Group Sibir Energy Source: LSE, Investec, 03 June 2007

6 Smaller Companies and Large Cap sector exposure Source: Investec, LSE, 30 June 2007 Support Services Real Estate General Retailers Software General Financials Industrial Engineering Electronic & Electrical Equipment Nonlife Insurance Media Travel & Leisure 0%5%10%15% Hoare Govett Index (ex ITs) 0%5%10% 15% Support Services Banks Oil & Gas Mining Pharmaceuticals Telecoms Life Insurance Media Travel & Leisure FTSE All Share

7 AIM Market sector exposure: 2000 & 2007 Source: LSE, Market Statistics Support Services Real Estate Mining Software General Financials Industrial Metals Oil & Gas Pharmaceuticals Media Travel & Leisure FTSE AIM Index June 2007 General Financials FTSE AIM Index March 2000 Software Media Support Services Travel & Leisure Real Estate Restaurants Engineering Household Goods Automobiles

8 UK & USA Small Cap relative performance Source: DATASTREAM 3/9/ HGSCEXT/FTSE100FRUSSL2/S&PCOMP(R.H.SCALE) UK USA UK and USA move in line

9 Are valuations stretched? 1 January Source: E Dimson and P Marsh; ABN Amro

10 UK Market Valuations Source: Datastream, I.Williams Oriel Securities, 28/08/ months forward PE ratio (ex loss makers) FTSE100FTSE250 Hoare Govett +AIM 6% 10% 14% 0% 2% 4% 6% 8% 10% 12% 14% 16% 12 months forward EPS growth PEG ratio is best for Smaller Companies

11 The Transformation of Smallcaps Declining Sectors Growth Sectors Chemicals Engineering Packaging Textiles I.T. Support Services Pharmaceuticals Healthcare Specialty Financials Media Electronics Retailers Travel & Leisure Dec ‘94 July ‘06 Source: Hoare Govett plus Aim From maturity to growth 28% 31% Others 59% 8%

12 Exposure to growth themes SLI UK Smaller Companies Fund (OEIC) Social Housing6.9% Global Growth Niche Leaders 19.6% Geographic Roll Out (Incl. Restaurants) 15.6% Morgan Sindall1.9%Autonomy2.7%Domino’s Pizza2.9% Kier1.5%Aveva2.3%Lavendon2.3% Connaught1.3%Expro International2.1%Restaurant Group1.5% Rok1.1%Chemring1.9%Speedy Hire1.5% Galliford1.1%ICG1.9%Clapham House1.5% Software11.6% Fidessa1.8%Majestic Wine1.5% Aveva2.3%Raymarine1.8%Topps Tiles1.2% Autonomy2.7%Genus1.4%Goals Soccer Centres1.1% Axon1.9%Detica1.3%Workspace1.1% Fidessa1.8%Latchways1.3%Carluccio’s1.0% Detica1.5%Stanley Gibbons1.1% Online9.4% SDL1.4%Paddy Power2.7% East Europe / Russia5.2% QXL Riccardo1.7% ITE2.0%Datacash1.3% QXL Ricardo1.7%ASOS1.1% JKX Oil & Gas1.5%Stanley Gibbons1.1% Abcam0.9% Yougov0.6% Source: Standard Life Investments, 20 August 2007 The essence of Smaller Companies investing

13 Reasons to keep the faith with Smallcaps Results season is shaping up well Directors are buying You get more growth Interesting themes Alpha Smaller Companies return 3.6% higher then FTSE All Share ( ) Source: Dimson & Marsh, London Business School, January 2007

14 Standard Life UK Smaller Companies Fund Total assets: £400m Total return 2006: +43.5% Ten years old on 6/01/07 Ten year return: +398% Annualised growth rate: +16.4% One manager, one process “Investment Week” smaller fund manager of the year 2001 “What Investment” Unit trust manager of the year 2006 “PLC Awards” Best Smaller Companies Fund 2007 Source: S&P Retail share class, SLI, 6 August 2007

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16 Remember - past performance is no guarantee of future performance. Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up and cannot be guaranteed. Standard Life Investments Limited, tel , a company registered in Scotland (SC ) Registered Office 1 George Street Edinburgh EH2 2LL. The Standard Life Investments group includes Standard Life Investments (Mutual Funds) Limited, SLTM Limited, Standard Life Investments (Corporate Funds) Limited and Standard Life Investments (Private Equity) Limited. Standard Life Investments Limited acts as Investment Manager for Standard Life Assurance Limited and Standard Life Pension Funds Limited. Standard Life Investments may record and monitor telephone calls to help improve customer service. All companies are authorised and regulated by the Financial Services Authority. ©2007 Standard Life Investments.