Interim Results - 6 Months to 31 December 1999

Edinburgh Small Companies Trust PLC 31 January 2000 EDINBURGH SMALL COMPANIES TRUST PLC INTERIM RESULTS - Outperforms benchmark by more than 50% - Edinburgh Small Companies Trust plc, an investment trust with an investment objective to achieve long term capital growth by investing in small UK quoted companies mainly with a market capitalisation, at the time of purchase, below £150 million, announces its interim results for the six months to 31 December 1999. The Trust is managed by Edinburgh Fund Managers, the £8.4 billion fund management group. INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 1999 Net asset value per share up 70.4%, compared to a rise of 18.6% in the Extended Hoare Govett Smaller Companies Index (excluding investment trusts) Share price up 83.1% to 195p The rise in NAV was due to a combination of good stock selection and the impact of the portfolio's gearing At the period end, the level of gearing represented 12.1% of shareholders' funds For further information, please contact : Alex Gowans, Director, Edinburgh Small Companies Trust plc 0131 313 1000 Alistair Currie, Director Edinburgh Fund Managers plc 0131 313 1000 EDINBURGH SMALL COMPANIES TRUST CHAIRMAN'S STATEMENT Edinburgh Small Companies Trust has made strong gains over the past six months with the net asset value per ordinary share rising by 70.4%. The company has substantially outperformed the rise of 18.6% by the benchmark, the Extended Hoare Govett Smaller Companies Index (excluding investment trusts) and a 10.0% appreciation from the FTSE All-Share Index. Over the same period the share price of Edinburgh Small Companies Trust appreciated by 83.1%. The rise in the net asset value was due to a combination of good stock selection and the impact of the portfolio being geared during a period of rising equity prices. Stock selection produced by far the greatest contribution to the gains over the past six months. Throughout the period the portfolio has had a substantial exposure to companies operating in software and computing services, media and photography and speciality and other finance sectors. A number of companies in these areas produced spectacular share price gains as investors became aware of investment opportunities through the advancement of new technology, particularly in the area of communications. During the course of the period under review some profits were taken in a number of the largest holdings following exceptional share price performances. However, the outlook for many of these companies remains encouraging and collectively companies operating in the three largest sectors referred to above still account for around 45% of the portfolio at the period end. Gearing In line with stated policy gearing has been actively used throughout the period under review. The average level of borrowing committed to the market over the past six months was around £21 million. At the period end the actual amount of gearing invested in equities represented 12.1% of shareholders' funds. The use of gearing has enhanced the net asset value by approximately 9.4% over the six month period. Share and Warrant Buybacks The trust did not purchase any shares for cancellation over the past six months. The trust did, however, purchase 1,571,143 warrants for cancellation at a total cost of £849,000. As the warrants cannot be re-issued their cancellation will reduce the dilution which would have occurred on exercise. Revenue Account Earnings per share have fallen from 0.78p to 0.30p per share. The fall is mainly due to a reduction in investment income and interest received from a lower yielding portfolio. Many of the faster growing companies now included within the portfolio typically retain surplus funds to finance future development rather than pay substantial dividends. The board is not recommending an interim dividend. Outlook The board continues to be encouraged by the outlook for investment in smaller companies. In addition to the continued overall undervaluation of the smaller company sector in relation to larger companies in general, it should be possible for the manager to continue to identify a number of attractive investments which are participating in the growth of communication and media. These two sectors in particular are expanding quickly through the advent of new technology and there are further opportunities for a number of small companies to establish a major presence in what are still very young and dynamic industries. Edinburgh Small Companies Trust intends to retain a major exposure to this part of the market, and whilst it may be difficult to repeat the level of outperformance achieved over the past six months, the board continues to view the future with confidence. Donald MacDonald Chairman 31 January 2000 STATEMENT OF TOTAL RETURN for the six months to 31 December 1999 (unaudited) Revenue Capital Total £000 £000 £000 Net gains on investments - 75,433 75,433 Buy back of warrants - (448) (448) Income from investments 1,335 - 1,335 Interest on UK Treasury Bills 230 - 230 Other income 26 - 26 Investment management fee (517) (517) (1,034) Administrative expenses (160) (46) (206) Return before finance costs and 914 74,422 75,336 taxation Interest payable and similar (574) (574) (1,148) charges Return on ordinary activities 340 73,848 74,188 before taxation Taxation (133) - (133) Return attributable to equity 207 73,848 74,055 shareholders Dividend in respect of equity - - - shares 207 73,848 74,055 Return per ordinary share 0.30p 106.20p 106.50p Diluted return per ordinary 0.29p 104.64p 104.93p share ______________________________________________________________________________ _____ for the six months to 31 December 1998 (unaudited) Revenue Capital Total £000 £000 £000 Net loss on investments - (33,908) (33,908) Buy back of warrants - - - Income from investments 1,463 - 1,463 Interest on UK Treasury Bills 383 - 383 Other income 20 - 20 Investment management fee (308) (308) (616) Administrative expenses (145) - (145) Return before finance costs and 1,413 (34,216) (32,803) taxation Interest payable and similar (580) (573) (1,153) charges Return on ordinary activities 833 (34,789) (33,956) before taxation Taxation (290) - (290) Return attributable to equity 543 (34,789) (34,246) shareholders Dividend in respect of equity (521) - (521) shares 22 (34,789) (34,767) Return per ordinary share 0.78p (50.04p) (49.26p) Diluted return per ordinary - - - share ______________________________________________________________________________ _____ for the year to 30 June 1999 (audited) Revenue Capital Total £000 £000 £000 Net loss on investments - (6,300) (6,300) Buy back of warrants - (228) (228) Income from investments 3,290 - 3,290 Interest receivable 658 - 658 Other income 17 - 17 Investment management fee (685) (685) (1,370) Administrative expenses (253) - (253) Return before finance costs and 3,027 (7,213) (4,186) taxation Interest payable and similar (1,147) (1,141) (2,288) charges Return on ordinary activities 1,880 (8,354) (6,474) before taxation Taxation (590) 78 (512) Return attributable to equity 1,290 (8,276) (6,986) shareholders Dividend in respect of equity (800) - (800) shares 490 (8,276) (7,786) Return per ordinary share 1.86p (11.90p) (10.04p) Diluted return per ordinary - - - share ______________________________________________________________________________ BALANCE SHEET (unaudited) At 31 At 30 June At 31 December 1999 December 1999 1998 £000 £000 £000 Fixed assets Investments 199,864 130,011 98,034 Current assets 9,636 7,470 11,403 Current liabilities 1,288 2,911 1,480 Net current assets 8,348 4,559 9,923 208,212 134,570 107,957 Creditors:amounts falling due after more 30,975 30,996 31,020 than one year 177,237 103,574 76,937 Capital and reserves Called up share capital 17,386 17,382 17,383 Reserves 159,851 86,192 59,554 Totalshareholders' funds relating to equity 177,237 103,574 76,937 interests Net asset value per 256.25p 150.39p 112.12p ordinary share Net asset value per ordinary share adjusting for dilution arising 249.40p 148.50p 111.14p from the full exercise of warrants CASHFLOW STATEMENT For 6 For 6 For year months months ended ended ended 30 June 31 December 31 December 1999 1998 1999 £000 £000 £000 Revenue before taxation 914 1,413 3,027 Decrease in accrued 301 202 112 income Increase in other (26) (5) (1) debtors Increase in creditors 132 (21) 30 Tax on franked (163) (358) (579) investment income Stock dividends received (439) (338) (673) Net cash inflow from 719 893 1,916 operating activities Net cash outflow from (1,163) (906) (2,069) servicing of finance Total tax repaid - 515 501 Net cash inflow from 3,991 (1,321) (4,103) financial investment Equity dividends paid (278) (521) (1,042) Net cash inflow before 3,269 (1,340) (4,797) financing Net cash outflow from (857) 15,988 15,417 financing Management of liquid (1,999) (521) (5,967) resources INCREASE IN CASH 413 5,792 4,653 NOTES : 1. The accounts are prepared under the same accounting policies used for the year to 30 June 1999. 2. The financial information for the year ended 30 June 1999 has been extracted from the Annual Report and Accounts of the Company which have been filed with the Registrar of Companies and contained an unqualified auditors'report. 3. The statement of total return (incorporating the revenue account) and balance sheet set out above do not represent full accounts in accordance with Section 240 of the Companies Act 1985. 4. The investment management fee in each case includes irrecoverable VAT calculated at 17.5 per cent. 5. No interim dividend has been declared in respect of the year ending 30 June 2000. 6. The Interim Report will be posted to shareholders on 17 February 2000 and copies will be available from the registered office of the Company . Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise. Investors may not get back the amount they originally invested. For Edinburgh Small Companies Trust plc Edinburgh Fund Managers plc, Secretary David Holland Assistant Secretary

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