Interim Results - 6 Months to 29 February 2000

Edinburgh Dragon Trust PLC 4 April 2000 EDINBURGH DRAGON TRUST PLC INTERIM RESULTS Edinburgh Dragon Trust's objective is long-term capital growth through investment in the Far East (excluding Japan and Australasia). The trust is managed by Edinburgh Fund Managers plc, a subsidiary of Edinburgh Fund Managers Group plc, the international fund management group with funds under management of £8.3 billion. Interim Results for Six Months Ended 29 February 2000 Undiluted net asset value increased by 26.9% compared with a rise of 12.2% (in sterling terms) in the MSCI All Country Asia Free (excluding Japan) Index Share price increased by 31.7% to 94.5p Telecommunications and technology stocks have been the main contributors to returns With economic growth on a sure footing and strong capital inflows expected to continue, the outlook remains positive For further information please contact:- Alistair Thompson, Investment Manager Edinburgh Fund Managers plc 0131 313 1000 Alex Gowans, Director Edinburgh Fund Managers plc 0131 313 1000 Chairman's Statement Performance I am pleased to report that, over the six months to 29 February 2000, the trust's net asset value rose by 26.9% to 113.38p compared with a rise of 12.2% in its benchmark index, the MSCI All Country Asia Free (excluding Japan) Index. The outperformance of 14.7% was predominately attributable to good stock selection which gave a positive contribution of 13.9%. The balance was attributable to gearing, the revenue deficit and share and warrant buybacks, which added 1.3%. However asset allocation cost 0.5%. Individual markets exhibited a wide range of returns (in sterling terms) with India up 52% and Malaysia up 30%, whilst the smaller markets of the Philippines and Thailand fell 26% and 13% respectively. South Korea fell 6% but this masks exceptional performance from the Korean telecommunications sector. Largely as a result of two stocks, namely Hutchison Whampoa and China Telecom, Hong Kong rose by 29%. In terms of the trust's outperformance, good stock selection in South Korea added 7.9% and in Hong Kong it added 5.5%. This was largely due to exposure to the themes of telecommunications, low risk technology and outsourcing. SK Telecom in South Korea rose 278% in sterling terms, China Telecom rose 201% and Li and Fung has doubled since November. The fund benefited from the exposure to Malaysia, which added 1.8% to returns (the Malaysian stock market will re-enter the benchmark index at the end of May) and to being overweight to Taiwan, which added 1.2%. The old economy' sectors such as utilities, banks and property did not perform well, but we would expect rotation into sectors such as these to occur in the forthcoming six months. Over the last year, on a net asset value total return basis according to the AITC, Dragon's performance ranks fifth in its sector of fourteen funds. Revenue For the six months to 29 February 2000, the revenue deficit represented 0.77p per share compared with a deficit of 0.17 p for the six months to 28 February 1999. The increased deficit was due to a fall in investment income as a consequence of lower yields and an increase in the management fee payable. Share and warrant buybacks The trust bought back for cancellation 2,600,000 shares and 499,624 warrants during the period at a total cost of £2 million. As a result of the buybacks, the net asset value per share was enhanced by 0.2%. The board intends to continue to purchase shares and warrants for cancellation when a buyback would enhance the net asset value per share for remaining shareholders. Outlook The economic background for Asia looks attractive over the coming year. Economic growth is now on a sure footing, buoyed by the increase in global growth and the increasing trend by major multi-national companies to source components and services externally and principally within Asia. There is little inflationary pressure and interest rates are either at or close to record lows. Strong capital inflows (in the form of current account surpluses, foreign direct investment and portfolio inflows) are expected to continue, albeit not at the same levels enjoyed in 1999. Corporate restructuring is gathering momentum and foreign competition should mean that this will continue. Whilst in the short term there are a large number of new share issues that may limit performance, the longer term outlook is positive and the company is well positioned to take advantage of the trends emerging. Tony Cassidy, Chairman 4 April 2000 STATEMENT OF TOTAL RETURN for the six months to 29 February 2000 (unaudited) Revenue Capital Total £000 £000 £000 Gains on investments - 56,648 56,648 Currency losses - (666) (666) Buy-back of warrants - (198) (198) Investment income 1,442 - 1,442 Interest receivable 527 - 527 Other income 20 - 20 Investment management fee (1,169) - (1,169) Administrative expenses (395) - (395) ________ _________ _________ Net return before finance costs 425 55,784 56,209 and taxation Interest payable and similar (2,170) - (2,170) charges ________ _________ _________ Return on ordinary activities (1,745) 55,784 54,039 before taxation Taxation (12) - (12) ________ _________ _________ Return attributable to equity (1,757) 55,784 54,027 shareholders ________ _________ _________ Return per ordinary share (0.77p) 24.48p 23.71p ________ _________ _________ Diluted return per ordinary (0.76p) 24.20p 23.33p share ________ _________ _________ STATEMENT OF TOTAL RETURN for the six months to 28 February 1999(unaudited) Revenue Capital Total £000 £000 £000 Gains on investments - 30,055 30,055 Currency gains - 118 118 Investment income 2,520 - 2,520 Interest receivable 166 - 166 Other income 23 - 23 Investment management fee (654) - (654) Administrative expenses (318) (5) (323) _______ _________ _________ Net return before finance costs 1,737 30,168 31,905 and taxation Interest payable and similar (2,109) - (2,109) charges _______ _________ _________ Return on ordinary activities (372) 30,168 29,796 before taxation Taxation (21) - (21) _______ _________ _________ Return attributable to equity (393) 30,168 29,775 shareholders _______ _________ _________ Return per ordinary share (0.17p) 12.81p 12.64p _______ _________ _________ STATEMENT OF TOTAL RETURN for the year to 31 August 1999(audited) Revenue Capital Total £000 £000 £000 Gains on investments - 104,456 104,456 Currency losses - (882) (882) Investment income 3,025 - 3,025 Interest receivable 2,533 - 2,533 Other income 38 - 38 Investment management fee (1,568) - (1,568) Administrative expenses (542) - (542) _______ _________ _________ Net return before finance costs 3,486 103,574 107,060 and taxation Interest payable and similar (4,337) - (4,337) charges _______ _________ _________ Return on ordinary activities (851) 103,574 102,723 before taxation Taxation (18) - (18) _______ _________ _________ Return attributable to equity (869) 103,574 102,705 shareholders _______ _________ _________ Return per ordinary share (0.37p) 44.38p 44.01p _______ _________ _________ BALANCE SHEET (unaudited) At 29 At 31 At 28 February August 1999 February 2000 1999 £000 £000 £000 Fixed assets Investments 307,490 238,277 132,652 ___________ ___________ ___________ Current assets 11,806 27,463 62,744 Current liabilities 1,677 1,442 1,357 ___________ ___________ ___________ Net current assets 10,129 26,021 61,387 ___________ ___________ ___________ 317,619 264,298 194,039 Creditors:amounts falling due after more 59,914 58,822 59,029 than one year ___________ ___________ ___________ 257,705 205,476 135,010 ___________ ___________ ___________ Capital and reserves Called up share capital 45,413 45,933 46,803 Reserves 212,292 159,543 88,207 ___________ ___________ ___________ Total shareholders' funds relating to equity 257,705 205,476 135,010 interests ___________ ___________ ___________ Net asset value per 113.38p 89.36p 57.58p ordinary share Net asset value per ordinary share adjusting for dilution arising 110.99p 87.99p n/a from the exercise of warrants CASHFLOW STATEMENT (unaudited) For the six For the six For the year months to months to to 29 February 28 February 31 August 2000 1999 1999 £000 £000 £000 Revenue before interest 425 1,737 3,486 and taxation Decrease in accrued 230 264 62 income Decrease in other 2 18 (76) debtors Increase in creditors 235 78 238 ---- ---- ---- Net cash inflow from 892 2,097 3,710 operating activities Net cash outflow from (2,156) (2,088) (4,276) servicing of finance Total tax paid (158) 696 1,161 Net cash inflow from (12,564) (18,367) (49,563) financial investment ---- ---- ---- Net cash inflow before (13,986) (17,662) (48,968) financing Net cash outflow from (1,996) (1,122) (3,582) financing Management of liquid 9,255 13,202 50,387 resources ---- ---- ---- DECREASE IN CASH AND CASH EQUIVALENTS (6,727) (5,582) (2,163) ---- ---- ---- NOTES : 1. The accounts have been prepared in accordance with the Statement of Recommended Practice Financial Statements of Investment Trust Companies'. The same accounting policies used for the year to 31 August 1999 have been applied other than for taxation. Franked investment income is reported net of tax credits in accordance with Financial Reporting Standard 16 Current Tax'. The figures for 1999 have been restated to reflect this change. 2. There will be no interim dividend for the year to 31 August 2000. 3. The statement of total return and the balance sheet set out above do not represent full statutory accounts in accordance with Section 240 of the Companies Act 1985. The financial information for the year to 31 August 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. 4. The Interim Report will be posted to shareholders on 20 April 2000 and copies will be available from the registered office. 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 David Holland Assistant Company Secretary

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