Half Yearly Report

RNS Number : 9834Q

Edinburgh Dragon Trust plc

23 April 2009

 



22 April 2009

EDINBURGH DRAGON TRUST PLC

HALF YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 28 FEBRUARY 2009

Edinburgh Dragon Trust’s objective is long-term capital growth through investment in the Far East (excluding Japan and Australasia). The Company’s benchmark is the MSCI All Country Asia (ex Japan).

 

 

•          The net asset value, which fell by 24.2% on a total return basis, outperformed its peer group and the benchmark index which fell by 25.8%.

 

•          This outperformance reflects the Company’s investment approach, which involves substantial due diligence on each underlying investment, concentrating on management quality, balance sheet strength, growth prospects and cash flow generation.

 

•          The near-term outlook for Asia remains difficult. In the longer term, however, the region’s sound fundamentals remain – its huge foreign reserves, high savings rates and modest debt provide a solid foundation.

For further information please contact:-

Peter Hames, Head of Asian Equities, Aberdeen Asset Management Asia                             0065 6395 2700

Ian Massie, Head of Investment Trust Investor Relations,                                                    0131 528 4000

Aberdeen Asset Management 

INTERIM BOARD REPORT

Background

The half year under review was a testing time for Asia's stockmarkets and economies, which could not escape the fallout from the global financial crisis. The Company suffered a 24.2% fall in net asset value on a total return basis and the share price declined by 25.0% from 146.0p to 109.5p over the six months to 28 February 2009. While these are disappointing returns in absolute terms, the Company, nonetheless, outperformed its peer group and the benchmark MSCI All Country Asia (ex Japan) Index, which fell by 25.8% in sterling terms on a total return basis. This outperformance reflected the Company's investment approach, which involves substantial due diligence on each underlying investment, concentrating on management quality, balance sheet strength, growth prospects and cash flow generation. 

Overview

As with the rest of the world, Asian equities were buffeted by exceptional volatility during the period under review. What began as a problem in the US subprime mortgage market evolved into a full-blown global economic crisis. The final weeks of September and the month of October were particularly unsettling; the decision by the US authorities to allow Lehman Brothers to fail resulted in a paralysis of credit markets, a collapse in confidence and steep market declines worldwide. Unprecedented coordinated government intervention around the globe, and record bailouts in both the US and Europe, could not calm nervous investors. 

Asia's economies had at first looked largely insulated from these international financial woes. In early 2008 Asian policymakers had been more preoccupied with overheating economies and rising inflation. Although it was apparent in the first half of 2008 that the region's stockmarkets were very sensitive to foreign outflows, it did not become clear until later in the year how dependent its economies still were on Western demand. Earlier beliefs that Asia had decoupled from the developed world were quickly dispelled, as plummeting exports exposed the extent to which much of Asia's intra-regional trade was in hard commodities or intermediate goods ultimately destined for the West.

By the period end, recession had claimed Hong Kong, Singapore and Taiwan. Even China, which had become accustomed to double-digit growth rates, saw fourth-quarter growth slow to its weakest rate in seven years. India's economy also stalled.

With the once thriving export sector battered by the slump in Western consumption, governments in Asia rolled out big stimulus measures. Largest among these was China's US$586 billion package that included investment in infrastructure and social welfare. Central banks were also able to offer support with aggressive interest rate cuts, thanks to the receding threat of inflation as commodity prices tumbled. 

While these concerted efforts brought some relief to markets in December, the mood turned bearish once more at the start of 2009 as the global economy deteriorated further. Falling corporate earnings and large downgrades of the year's economic forecasts contributed to the negative mood. Moreover, problems securing credit - banks have remained wary of lending - prompted firms to lower investment and cut jobs, which in turn hurt consumers' spending capacity. Adding to the bleak sentiment were escalating concerns that troubled global banks, in urgent need of recapitalisation, may be on the verge of being nationalised. 

Further complicating matters was the fractious political landscape. Terrorist attacks in India's financial hub of Mumbai; the siege of Thailand's main airports, which ended with Abhisit Vejjajiva's being elected as the country's third prime minister in as many months; and ongoing political drama in Malaysia impaired already shaky investor confidence. The recent unrest in Thailand seems to have been resolved, at least for the time being, but your Manager continues to monitor developments very closely.

Portfolio

In a period characterised by extreme volatility, the Manager maintained a good balance regionally in the portfolio, with the significant underweight to China working in our favour. The Manager remains wary of many listed Chinese companies, given concerns such as levels of transparency and government intervention in a number of industries. As such, the preference is to gain exposure to China via Hong Kong stocks, or Chinese entities listed in Hong Kong. The Company remained underweight towards Taiwan, where many companies are involved in cyclical and export-oriented industries that have been hit particularly hard in recent months. Conversely, the overweight position in Malaysia, which offers a variety of higher yielding stocks, particularly within the financial and consumer sectors, helped boost relative performance. 

At the stock level, your Company's holdings in consumer-related businesses, such as India's motorbike maker Hero Honda, Unilever Indonesia, Malaysia's British American Tobacco and Singapore-listed food retailer Dairy Farm, proved defensive. In particular, Hero Honda enjoyed decent volume growth, reinforcing its leading market position. Its low dependence on financing and greater exposure to the rural sector, where customers do not tend to rely on credit, have helped cushion it from the worst of the economic downturn. 

Other noteworthy relative outperformers included China Mobile, which has continued to expand its subscriber base and gain market share, reflecting its ability to maintain its advantage in the mobile telecom segment in the face of government-led restructuring efforts. Gail, in India, and Singapore Airlines, meanwhile, benefited from lower oil prices. Also in Singapore, ST Engineering's earnings were underpinned by its solid order book; the company remains committed to its generous dividend policy. In Taiwan, chip foundry Taiwan Semiconductor Manufacturing Company (TSMC) outperformed and is well positioned - on account of its healthy balance sheet and strong cash flow - to continue to make the necessary investment in research and development, while its main competitors struggle.

On a less optimistic note, some of your Company's banks and property holdings stumbled amid the weak macroeconomic environment: Hong Kong's Dah Sing Banking, Wing Hang Bank and Sun Hung Kai Properties; India's ICICI Bank and Housing Development Finance Corporation (HDFC); Korea's Daegu Bank and Busan Bank; Ayala Land in the Philippines; and Singapore's City Developments all detracted from relative performance. That said, particular mention should be made here about the quality of Asian banks: they are generally more tightly regulated, boast stronger balance sheets, and typically have very limited exposure to toxic assets, certainly in comparison with many of their foreign peers. It is also instructive to note that our property holdings generally have low gearing, sound balance sheets and quality assets and landbanks. 

Other holdings that fared poorly include Hong Kong lender Standard Chartered Bank, which fell in the run-up to its results release as well as in anticipation of its rights issue. The stock has since rebounded, buoyed by better-than-expected earnings results, while its capital base remains sound. Hong Kong-listed ASM Pacific Technology also gave poor return, its business prospects declining in parallel with the weakening technology sector. Encouragingly, though, this semiconductor equipment-maker's good financial position has allowed it to maintain research and development efforts, which should help strengthen its competitive position amid sector consolidation. 

Turning to portfolio activity, one new stock was introduced during the period under review: ABB India, the local subsidiary of one of the world's leading power and automation engineering companies. Elsewhere, your Manager increased positions in several holdings that we believe would emerge stronger from the current turmoil and had been oversold. Among these were Hong Kong-listed CNOOC, Standard Chartered Bank, China Mobile and Hang Lung Group; India's HDFC and Infosys Technologies; Ayala Land in the Philippines; Singapore's City Developments, Fraser and Neave, Singapore Telecommunications and Jardine Strategic Holdings; and Thailand's PTT Exploration & Production.  Against this, seven holdings were divested. These included Korea's Hyundai Motor and Taiwan's Fubon Financial, given deteriorating prospects, and China's Zhejiang Expressway, because of stagnating revenue growth from its toll roads and a lack of clear direction in its securities arm. In India, the Manager exited Satyam Computer Services, after founder-chairman Ramalinga Raju's astonishing admission of fraud. Investigations are ongoing but the company's results and financial data had obviously been manipulated. Hong Kong-listed utility CLP and Pos Malaysia, which had outperformed the broader market, were also sold, along with Korea's Kookmin Bank, whose repurchase offer we accepted. In addition, we took partial profits from holdings that had seen sharp run-ups, including India's ICICI Bank, Taiwan's TSMC, and Malaysia's Bumiputra-Commerce and Public Bank. 

Finally, we participated in the rights issue of Standard Chartered Bank, which was priced at a sizeable discount to its ordinary shares. 

Revenue account

For the six months to 28 February 2009 the revenue account recorded a return of £216,000, representing 0.09p per share compared with a return of £221,000 for the six months to 29 February 2008. The majority of the Company's portfolio income, in common with the majority of Asian dividend income, is accounted for in the second half of the Company's financial year.  

Gearing

The Company repaid the $80 million Loan Notes with effect on 30 December 2008, the final repayment date. The Board has continued to have a gearing facility, and a £40 million multi-currency loan facility with the Royal Bank of Scotland was put in place in September 2008. To date the Company has not drawn on this facility.  

Events during the period

At the Company's Annual General Meeting on 17 December 2008, all resolutions were passed. A final dividend of 1.6p was paid to shareholders on 19 December 2008.  

Outlook

The near-term outlook for Asia remains difficult and markets will likely continue nervous and volatile as the recession puts pressure on corporate earnings. In the longer term, however, Asia's sound fundamentals remain - its huge foreign reserves, high savings rates and modest debt provide a solid foundation; and arguably the region is less exposed to the problems currently faced by the West. Massive global fiscal pump-priming should also help spur economic recovery in due course. In addition, we view positively the measures taken to redirect economies towards the more sustainable path of domestic-led growth. 

Equally important, Asian companies and households generally have less debt than their Western counterparts. As cheaper commodities alleviate pressures on businesses, falling food and energy costs will also help boost consumers' purchasing power. 

In this environment, the Dragon Board continues to endorse the Manager's strategy to scrutinise both current holdings and new investment opportunities, focusing only on well-managed companies with robust business models, sound finances and regard for minority shareholders. We are confident that the portfolio's focus on such companies will deliver good results over the long term.

Principal Risks and Uncertainties

The Board has adopted a matrix of the key risks that affect the company's business. The principal risks are as follows:

• Resource risk: The Company is an investment trust and has no employees. The responsibility for the management of the Company has been delegated to Edinburgh Fund Managers plc ('the Manager'), a subsidiary of Aberdeen Asset Management PLC, under the management agreement. The terms of the management agreement cover the necessary duties and conditions expected of the Manager. The Board reviews the performance of the Manager on a regular basis and their compliance with the management contract formally on an annual basis.

• Investment and market risk: The Company is exposed to the effect of variations in share prices due to the nature of its business. Investment in Asian equities may involve a greater degree of risk than that usually associated with investment in the Western securities markets. These include a greater risk of social, political and economic instability including changes in government which may restrict investment opportunities and have an adverse effect on economic reform. Changes in legal, regulatory and accounting policies can also affect the value of the Company's investments. The lower volumes of trading in certain securities of emerging markets issuers may result in lack of liquidity and price volatility. In addition, currency fluctuations and high interest rates may affect the value of the Company's investments and the income derived therefrom.  

The Board keeps under review the investment policy of the Company, taking account of stockmarket factors, and compares the Company's performance to the MSCI All Country Asia (ex-Japan) benchmark index and peer group. Further details on other risks relating to the Company's investment activities, including market price, liquidity and foreign currency risks, are provided in the annual report.  

• Gearing risk: The Company has a £40 million multi-currency loan facility. Gearing has the effect of exacerbating market falls and enhancing gains. In order to manage the level of gearing, the Board has set a maximum gearing ratio of 20%.  

• Regulatory risk: The Company operates in a complex regulatory environment and faces a number of regulatory risks. Serious breaches of regulations, such as section 842 of the Income and Corporation Taxes Act 1988, the UKLA Listing Rules and the Companies Act, could lead to a number of detrimental outcomes and reputational damage. The Audit Committee monitors compliance with regulations by reviewing internal control reports from the Manager.

• Discount volatility: The Company's share price can trade at a discount to its underlying net asset value. The Board monitors the discount level of the Company's shares and has in place a buyback mechanism whereby the Manager is authorised to buyback shares within certain limits.  

The Company has established a comprehensive framework for managing these risks which is evolving continually as the Company's investment activities change in response to market developments.  

Directors' Responsibility Statement

The Directors are responsible for preparing the half yearly financial report, in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

• the condensed set of financial statements within the half yearly financial report has been prepared in accordance with Accounting Standards Board's Statement 'Half Yearly Financial Reports'; and

• the Interim Board Report includes a fair view of the information required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules.

For Edinburgh Dragon Trust plc

Tony Cassidy

Chairman

INCOME STATEMENT 

	Six months ended 28 February 2009 (unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Loss on investments	-	(91,650)	(91,650)
Net currency loss	-	(306)	(306)
Income	3,735	-	3,735
Investment management fee	(1,415)	-	(1,415)
Administrative expenses	(561)	-	(561)
	_________	_________	_________
Net return before finance costs and taxation	1,759	(91,956)	(90,197)
Finance costs	(1,444)	-	(1,444)
	_________	_________	_________
Net return on ordinary activities before taxation	315	(91,956)	(91,641)
Taxation	(99)	-	(99)
	_________	_________	_________
Return on ordinary activities after taxation	216	(91,956)	(91,740)
	_________	_________	_________
Return per Ordinary share (pence)	0.09	(39.81)	(39.72)
	_________	_________	_________

	Six months ended 29 February 2008 (unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Net gains on investments	-	24,594	24,594
Net currency loss	-	(833)	(833)
Income	4,572	-	4,572
Investment management fee	(2,047)	-	(2,047)
Administrative expenses	(617)	-	(617)
	_________	_________	_________
Net return before finance costs and taxation	1,908	23,761	25,669
Finance costs	(1,444)	-	(1,444)
	_________	_________	_________
Net return on ordinary activities before taxation	464	23,761	24,225
Taxation	(243)	-	(243)
	_________	_________	_________
Return on ordinary activities after taxation	221	23,761	23,982
	_________	_________	_________
Return per Ordinary share (pence)	0.09	10.10	10.19
	_________	_________	_________

	Year ended 31 August 2008 (audited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Net gains on investments	-	805	805
Net currency loss	-	(980)	(980)
Income	14,316	-	14,316
Investment management fee	(4,025)	-	(4,025)
Administrative expenses	(1,162)	-	(1,162)
	_________	_________	_________
Net return before finance costs and taxation	9,129	(175)	8,954
Finance costs	(2,985)	-	(2,985)
	_________	_________	_________
Net return on ordinary activities before taxation	6,144	(175)	5,969
Taxation	(642)	-	(642)
	_________	_________	_________
Return on ordinary activities after taxation	5,502	(175)	5,327
	_________	_________	_________
Return per Ordinary share (pence)	2.35	(0.07)	2.28
	_________	_________	_________

The total column of this statement represents the profit and loss account of the Company. 

A Statement of Total Recognised Gains and Losses has not been presented as all gains and losses are recognised in the Income Statement.

All revenue and capital items in the above statement derive from continuing operations.

  BALANCE SHEET 

	As at	As at	As at
	28 February 2009	29 February 2008	31 August 2008
	(unaudited)	(unaudited)	(audited)
		£'000	£'000
Non-current assets
Investments at fair value through profit or loss	275,216	416,446	378,173
	_________	_________	_________
Current assets
Debtors	880	2,381	2,614
Certificates of deposit	-	-	27,419
Cash and short term deposits	7,929	24,240	15,069
	_________	_________	_________
	8,809	26,621	45,102
	_________	_________	_________
Creditors: amounts falling due within one year
Loan Notes	-	(40,202)	(43,861)
Other creditors	(1,673)	(1,740)	(1,627)
	_________	_________	_________
	(1,673)	(41,942)	(45,488)
	_________	_________	_________
Net current (liabilities)/assets	7,136	(15,321)	(386)
	_________	_________	_________
Total assets less current liabilities	282,352	401,125	377,787
	_________	_________	_________
Capital and reserves
Called-up share capital	46,190	46,800	46,190
Share premium account	4,285	4,285	4,285
Special reserve	75,770	80,453	75,770
Capital redemption reserve	10,017	9,407	10,017
Capital reserve	142,290	258,182	234,246
Revenue reserve	3,800	1,998	7,279
	_________	_________	_________
Equity Shareholders' funds	282,352	401,125	377,787
	_________	_________	_________
Net asset value per Ordinary share (pence)	122.26	171.41	163.58
	_________	_________	_________

           RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 

Six months ended 28 February 2009 (unaudited)
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 August 2008	46,190	4,285	75,770	10,017	234,246	7,279	377,787
Return on ordinary activities after taxation	-	-	-	-	(91,956)	216	(91,740)
Dividend paid	-	-	-	-	-	(3,695)	(3,695)
	______	_______	______	_______	_______	_______	______
Balance at 28 February 2009	46,190	4,285	75,770	10,017	142,290	3,800	282,352
	______	_______	______	_______	_______	_______	______
Six months ended 29 February 2008 (unaudited)
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	realised	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 August 2007 (restated)	47,415	4,285	85,242	8,792	234,421	4,366	384,521
Return on ordinary activities after taxation	-	-	-	-	23,761	221	23,982
Dividend paid	-	-	-	-	-	(2,589)	(2,589)
Purchase of ordinary shares for cancellation	(615)	-	(4,789)	615	-	-	(4,789)
	______	_______	______	_______	_______	_______	______
Balance at 29 February 2008	46,800	4,285	80,453	9,407	258,182	1,998	401,125
	______	_______	______	_______	_______	_______	______
For the year ended 31 August 2008
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 August 2007 (restated)	47,415	4,285	85,242	8,792	234,421	4,366	384,521
Return on ordinary activities after taxation	-	-	-	-	(175)	5,502	5,327
Dividends paid	-	-	-	-	-	(2,589)	(2,589)
Purchase of Ordinary shares for cancellation	(1,225)	-	(9,472)	1,225	-	-	(9,472)
	_____	_____	_____	_____	_____	_____	_____
Balance at 31 August 2008	46,190	4,285	75,770	10,017	234,246	7,279	377,787
	_____	_____	_____	_____	_____	_____	_____

            CASHFLOW STATEMENT  

	Six months ended	Six months ended	Year  ended
	28 February 2009	29 February 2008	31 August 2008
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Net return on ordinary activities before finance costs and taxation	(90,197)	25,669	8,954
Adjustments for:
Losses/(gains) on investments	91,650	(24,594)	(805)
Currency losses	306	833	980
Decrease/(increase) in accrued income	343	(945)	(351)
(Increase)/decrease in other debtors	(19)	139	154
(Decrease)/increase in creditors	(188)	80	(97)
	_________	_________	_________
Net cash inflow from operating activities	1,895	1,182	8,835
Net cash outflow from servicing of finance	(1,959)	(1,422)	(2,915)
Total tax paid	(52)	(59)	(601)
Net cash inflow from financial investment	13,419	23,204	37,021
Equity dividend paid	(3,695)	(2,589)	(2,589)
	_________	_________	_________
Net cash inflow before financing	9,608	20,316	39,751
Buy back of ordinary shares (including expenses)	-	(4,789)	(9,472)
	_________	_________	_________
Increase in cash	9,608	15,527	30,279
	_________	_________	_________
Reconciliation of net cash flow to movements in net debt
Increase in cash as above	9,608	15,527	30,279
Amortised Loan Note expenses	-	(15)	(31)
Exchange rate movements	(306)	(833)	(980)
	_________	_________	_________
Movement in net debt in the period	9,302	14,679	29,268
Opening net debt	(1,373)	(30,641)	(30,641)
	_________	_________	_________
Closing net funds/(debt)	7,929	(15,962)	(1,373)
	_________	_________	_________
Represented by:
Cash and short term deposits	7,929	24,240	15,069
Certificates of deposit	-	(40,202)	27,419
Debt falling due in less than one year	-	-	(43,861)
	_________	_________	_________
	7,929	(15,962)	(1,373)
	_________	_________	_________

  NOTES:

1.    Accounting Policies

The accounts have been prepared in accordance with applicable UK Accounting Standards, with pronouncements on half-yearly reporting issued by the Accounting Standards Board and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (issued in January 2009 and adopted early). The early adoption of the January 2009 SORP had no effect on the financial statements of the Company, other than the requirement to separately disclose capital reserves that relate to the revaluation of investments held at the reporting date. These are disclosed in note 6. This new requirement replaces the previous requirement to disclose the value of the capital reserve that was unrealised. They have also been prepared on the assumption that approval as an investment trust will continue to be granted.

The financial statements and the net asset value per share figures have been prepared in accordance with UK Generally Accepted Accounting Practice ('UK GAAP').

The interim accounts have been prepared using the same accounting policies as the preceding annual accounts.

		Six months ended	Six months ended	Year ended
		28 February 2009	29 February 2008	31 August 2008
2.	Income	£'000	£'000	£'000
	Income from investments
	UK dividend income	3	-	218
	Overseas dividends	3,335	4,193	13,209
	Scrip dividends	-	-	10
		_________	_________	_________
		3,338	4,193	13,437
	Other income
	Deposit interest	397	366	844
	Stock lending income	-	13	35
		_________	_________	_________
		397	379	879
		_________	_________	_________
	Total income	3,735	4,572	14,316
		_________	_________	_________

3.     The taxation charge for the period is based on withholding tax suffered on the receipt of overseas dividends.

		Six months ended	Six months ended	Year ended
		28 February 2009	29 February 2008	31 August 2008
4.	Return per share	p	p	p
	Revenue return	0.09	0.09	2.35
	Capital return	(39.81)	10.10	(0.07)
		_________	_________	_________
	Total return	(39.72)	10.19	2.28
		_________	_________	_________
	The figures above are based on the following:
		£'000	£'000	£'000
	Revenue return	216	221	5,502
	Capital return	(91,956)	23,761	(175)
		_________	_________	_________
	Total return	(91,740)	23,982	5,327
		_________	_________	_________
	Weighted average number of Ordinary shares in issue	230,954,375	235,300,776	233,807,053
		_________	_________	_________

5.    Transaction costs

     During the period expenses were incurred in acquiring or disposing of investments classified as fair value. These have
     been expensed through capital and are included within (losses)/gains on investments in the Income Statement. The
     total costs were as follows: 

		Six months ended	Six months ended	Year ended
		28 February 2009	29 February 2008	31 August 2008
		£'000	£'000	£'000
	Purchases	85	39	57
	Sales	131	99	146
		_________	_________	_________
		216	138	203
		_________	_________	_________

6.     The capital reserve reflected in the Balance Sheet at 28 February 2009 includes gains of £12,168,000 (29 February
        2008 - £126,492,000; 31 August 2008 - £100,779,000) which relate to the revaluation of investments held at the
        reporting date.

7.    Net asset value per equity share

	As at	As at	As at
	28 February 2009	29 February 2008	31 August 2008
	p	p	p
Net asset value per equity share	122.26	171.42	163.58
Deduct: Loan Note issue expenses	-	(0.01)	-
	_________	_________	_________
Adjusted net asset value per equity share	122.26	171.41	163.58
	_________	_________	_________
	£'000	£'000	£'000
Net assets attributable	282,352	401,125	377,787
Deduct: Loan Note issue expenses	-	(15)	-
	_________	_________	_________
Adjusted net assets attributable	282,352	401,110	377,787
	_________	_________	_________

      The net asset value per Ordinary share is based on net assets (adjusted to reflect the deduction of Loan Notes at
      par) and on 230,954,375 (29 February 2008 - 234,000,375; 31 August 2008 - 230,954,375) Ordinary shares, being

      the number of Ordinary shares in issue at the period end.

8.   There will be no interim dividend for the year to 31 August 2009; the objective of the Company is long term
      capital appreciation.

9.   As at 28 February 2009 there were 230,954,375 (29 February 2008 - 234,000,375; 31 August 2008 - 230,954,375) 
      Ordinary shares in issue. During the six months to 28 February 2009 no Ordinary shares were bought back. 
      During the six months ended 29 February 2008 3,076,500 Ordinary shares were bought back for cancellation at a 
      total cost of £4,789,000 including expenses. During the year ended 31 August 2008 6,122,500 Ordinary shares 
      were bought back for cancellation at a total cost of £9,472,000 including expenses.

10.  The financial information contained in this Half-Yearly Financial Report does not constitute statutory accounts as 
      defined in Sections 434 - 436 of the Companies Act 2006. The financial information for the year ended 31 August 
      2008 has been extracted from published accounts that have been delivered to the Registrar of Companies and on 
      which the report of the auditors was unqualified and did not contain a Statement under either Section 237(2) or (3) 
      of the Companies Act 1985.  

      The auditors have reviewed the financial information for the six months ended 28 February 2009 pursuant to the
      Auditing Practices Board guidance on Review of Financial Information. 

11.  The half yearly financial report is available on the Company's website, www.edinburghdragon.co.uk and the interim
      report will be posted to shareholders in May 2009 and copies will be available from the Manager.

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 and may be affected by exchange rate movements. Investors may not get back the amount they originally invested. Where investment is made in emerging markets, their potential volatility may increase the risk to the value of the investment.

For Edinburgh Dragon Trust plc

Edinburgh Fund Managers plc, Secretary

 

END

 

 

IR PUUAGCUPBGGP