Half Yearly Report - Amendmen

RNS Number : 9199F

Edinburgh New Income Trust plc

21 January 2010

 



AMENDMENT

This announcement replaces the announcement released on 21 January 2010 at 7.30hrs (RNS No: 8506F)

The record date for the 2nd interim dividend per note 5 is 29 January 2010 (to replace 27 January 2010). The ex-dividend date is 27 January 2010.

Please see below the correct announcement.

News Release

21 January 2010

EDINBURGH NEW INCOME TRUST PLC

HALF YEARLY FINANCIAL REPORT FOR THE SIX MONTHS TO 30 NOVEMBER 2009

Edinburgh New Income Trust plc's investment objective is to provide ordinary shareholders with an attractive level of income, together with the potential for capital and income growth and its zero dividend preference shareholders with a pre-determined capital entitlement on 31 May 2011.

•    Second interim dividend of 1.3p per ordinary share payable on 19 February 2010.

For further information, please contact:

Charles Luke, Investment Manager, Aberdeen Asset Management PLC    Tel: [phone]

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.

EDINBURGH NEW INCOME TRUST

INTERIM BOARD REPORT FOR THE SIX MONTHS TO 30 NOVEMBER 2009

Equity markets have been remarkably buoyant in recent months, and in the six months to 30 November 2009 our net asset value per ordinary share rose by 28.6% to 54.0p. Including dividends, the total return of the net asset value over the period was 38.0%. On a total return basis the share price rose by 34.1% to 54.0p, while the FTSE All-Share Index increased by 19.7%. 

The share price of the ZDPs rose to 133.8p compared with an underlying net asset value of 130.0p.  

Dividends

A first interim dividend of 1.3p (2008 - 1.8p) was declared in September 2009 and paid in October 2009. The Board has declared a second interim dividend of 1.3p which will be paid on 19 February 2010. In the absence of unforeseen circumstances, the Board's aim is to maintain the total dividend at last year's level of 6.0p. Although income received in the first six months was significantly lower than in the corresponding period of 2008, the Company can draw on its Revenue Reserves to meet the total dividend of 6.0p. 

Portfolio Review

We remain in a period of quite exceptional monetary and fiscal accommodation worldwide, which has led to much of the strength in world equity markets. Otherwise, the recession has been generally deeper than expected and in most countries, the UK apart, the subsequent recovery has been more robust. Here, our greater exposure to financial services has been a factor in the delayed recovery.

We have focused the equity portfolio on good quality companies with either attractive overseas earnings where the recovery has been stronger, or a value-focus for those companies operating primarily in the UK. This has resulted in the equity part of the portfolio outperforming the All Share Index over the 6 month period. At the total assets level we keep gearing under control by maintaining a cash buffer together with a corporate bond portfolio to generate additional income.

Gearing

Gearing levels reached 190% in the early part of the period but fell as the market rose strongly. At 30th November 2009 equity investments totalled £19.5m and the ratio of total equity investments to ordinary shareholders funds was 176%.

The capital cover of the ZDPs, which compares gross assets (excluding revenue reserves) to the final repayment entitlement of the ZDPs increased from 1.24 times at the end of May 2009 to 1.39 times at the end of November 2009.

Outlook 

We are seeing signs of improvement in the domestic economy as conditions in the financial and housing sectors stabilise, but many fundamental problems remain. Relatively high levels of spare capacity, restricted bank finance, weak government finances, and the uncertainty that a general election is likely to bring, may all weigh on a stockmarket that has enjoyed a very strong recent rally. The managers are emphasising good-quality companies, with strong business models and robust balance sheets. These are seen as likely to be the stronger performers as we look ahead.

Events During the Period

At the Company's AGM on 30 September 2009 all resolutions were passed.  

Risks and Uncertainties

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

• Stockmarket risk: The Company is exposed to the effect of variations in share prices due to the nature of its business. A fall in the value of its portfolio will have an adverse effect on shareholders' funds, which will be exacerbated by the gearing effect of the zero dividend preference shares. It is not the aim of the Board to eliminate entirely the risk of capital loss, rather it is its aim to seek capital growth so that the gearing effect will multiply the gains for ordinary shareholders. However, the Board has to have regard to the damage which will result from a significant fall in share prices and closely monitors the level of gearing. An aim is to ensure that the future capital entitlement of the zero dividend preference shares can always be met.

• Capital structure risk: The Company's capital structure and its accounting policies mean that the capital accrual on the zero dividend preference shares and 50% of the management fee are charged to the capital account rather than the revenue account. A consequence is that the value of the portfolio must rise, or these charges will result in a drop in net asset value for ordinary shareholders. 

• Income/dividend risk: The investment objective of the Company, to provide ordinary shareholders with an attractive level of income, means that the Manager has to achieve an above average dividend yield on the investments in the portfolio. A consequence is that the performance of the equity portfolio may not always match that of the stockmarket as a whole, with a consequential impact on shareholder returns. The Board's aim is to maximise returns consistent with achieving its dividend requirements.

• Regulatory risk: The Company operates in a complex regulatory environment and faces a number of regulatory risks. A breach of section 842 of the Income and Corporation Taxes Act 1988 could result in the Company being subject to capital gains tax on portfolio investments. Breaches of other regulations such as the UKLA listing rules, could lead to a number of detrimental outcomes and reputational damage. Breaches of controls by service providers such as the Manager could also lead to reputational damage or loss.

The Directors have adopted a robust framework of control which is designed to monitor all key risks facing the Company, and to provide a monitoring system to enable the Directors to mitigate these risks as far as possible.  

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 New Income Trust plc

David Ritchie

Chairman

20 January 2010

INCOME STATEMENT

	Six months ended  30 November 2009			Six months ended  30 November 2008
	(unaudited)			(unaudited)
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments held at fair value	-	3,334	3,334	-	(11,131)	(11,131)
Income	583	-	583	936	-	936
Investment management fee	(49)	(49)	(98)	(53)	(53)	(106)
VAT recoverable on investment management fees	-	-	-	55	54	109
Administration expenses	(86)	-	(86)	(100)	-	(100)
	_______	______	______	_______	______	______
Net return before finance costs and taxation	448	3,285	3,733	838	(11,130)	(10,292)
Finance costs of ZDP Shareholders	-	(568)	(568)	-	(535)	(535)
	_______	______	______	_______	______	______
Net return on ordinary activities before and after taxation	448	2,717	3,165	838	(11,665)	(10,827)
	_______	______	______	_______	______	______
Return per Ordinary share (pence)	2.18	13.24	15.42	4.08	(56.85)	(52.77)
	_______	______	______	_______	______	______

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

No Statement of Total Recognised Gains and Losses has been prepared as all gains and losses have been reflected in the Income Statement.

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

No operations were acquired or discontinued in the period.

  INCOME STATEMENT

	Year ended 31 May 2009
	(audited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Losses on investments held at fair value	-	(11,431)	(11,431)
Income	1,539	-	1,539
Investment management fee	(96)	(96)	(192)
Administration expenses	54	54	108
	(170)	-	(170)
Net return before finance costs and taxation	_______	_______	_______
	1,327	(11,473)	(10,146)
Finance costs of ZDP Shareholders
	-	(1,084)	(1,084)
Net return on ordinary activities before and after taxation	_______	_______	_______
	1,327	(12,557)	(11,230)
	_______	_______	_______
Return per Ordinary share (pence)	6.47	(61.20)	(54.73)
	_______	_______	_______

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

No Statement of Total Recognised Gains and Losses has been prepared as all gains and losses have been reflected in the Income Statement.

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

No operations were acquired or discontinued in the period.

  BALANCE SHEET 

	As at	As at	As at
	30 November	30 November	31 May
	2009	2008	2008
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	27,951	17,506	19,314
	_________	_________	_________
Current assets
Debtors and prepayments	457	231	379
AAA Money Market funds	800	12	1,250
Cash and short term deposits	1,671	10,611	6,909
	_________	_________	_________
	2,928	10,854	8,538
	_________	_________	_________
Creditors: amounts falling due within one year	(85)	(212)	(93)
	_________	_________	_________
Net current assets	2,843	10,642	8,445
	_________	_________	_________
Total assets less current liabilities	30,794	28,148	27,759
Creditors: amounts falling due after more than one year
Zero Dividend Preference shares	(19,715)	(18,599)	(19,147)
	_________	_________	_________
Net assets	11,079	9,549	8,612
	_________	_________	_________
Capital and reserves
Called-up share capital	205	205	205
Special reserve	20,035	20,035	20,035
Capital reserve	(10,078)	(11,903)	(12,795)
Revenue reserve	917	1,212	1,167
	_________	_________	_________
Equity Shareholders' funds	11,079	9,549	8,612
	_________	_________	_________
Net asset value per Ordinary share (pence)	53.99	46.54	41.97
	_________	_________	_________

  RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

Six months ended 30 November 2009 (unaudited)

	Share	Special	Capital	Revenue
	capital	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000
Balance at 31 May 2009	205	20,035	(12,795)	1,167	8,612
Return on ordinary activities after taxation	-	-	2,717	448	3,165
Dividends paid	-	-	-	(698)	(698)
	______	_______	______	_______	_______
Balance at 30 November 2009	205	20,035	(10,078)	917	11,079
	______	_______	______	_______	_______

Six months ended 30 November 2008 (unaudited)

	Share	Special	Capital	Revenue
	capital	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000
Balance at 31 May 2008	205	20,035	(238)	1,318	21,320
Return on ordinary activities after taxation	-	-	(11,665)	838	(10,827)
Dividends paid	-	-	-	(944)	(944)
	______	_______	______	_______	_______
Balance at 30 November 2008	205	20,035	(11,903)	1,212	9,549
	______	_______	______	_______	_______
Year ended 31 May 2009 (audited)
	Share	Special	Capital	Revenue
	capital	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000
Balance at 31 May 2008	205	20,035	(238)	1,318	21,320
Return on ordinary activities after taxation	-	-	(12,557)	1,327	(11,230)
Dividends paid	-	-	-	(1,478)	(1,478)
	________	_________	________	_________	________
Balance at 31 May 2009	205	20,035	(12,795)	1,167	8,612
	________	________	________	_________	________

  CASHFLOW STATEMENT 

	Six months ended	Six months ended	Year ended
	30 November 2009	30 November 2008	31 May  2009
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Net total return before finance costs and taxation	3,733	(10,292)	(10,146)
Adjustment for:
(Gains)/losses on investments at fair value through profit or loss	(3,334)	11,131	11,431
Effective yield adjustment	39	-	-
(Increase)/decrease in accrued income	(62)	83	(70)
Increase in other debtors	(2)	(113)	(109)
Decrease in other creditors	(8)	(25)	(18)
	_________	_________	_________
Net cash inflow from operating activities	366	784	1,088
Net cash (outflow)/inflow from financial investment	(5,342)	6,502	4,273
Equity dividends paid	(698)	(944)	(1,478)
Overseas tax paid	(14)	-	(1)
	_________	_________	_________
Net cash (outflow)/inflow before financing	(5,688)	6,342	3,882
Net cash inflow from management of liquid resources	1,700	3,203	1,965
	_________	_________	_________
(Decrease)/increase in cash	(3,988)	9,545	5,847
	_________	_________	_________
Reconciliation of net cash flow to movement in net funds
(Decrease)/increase in cash as above	(3,988)	9,545	5,847
Net change in liquid resources	(1,700)	(3,203)	(1,965)
Net changes in debt due in more than one year	(568)	(527)	(1,079)
	_________	_________	_________
Movement in net debt	(6,256)	5,815	2,803
Opening net debt	(10,988)	(13,791)	(13,791)
	_________	_________	_________
Closing net debt	(17,244)	(7,976)	(10,988)
	_________	_________	_________
Represented by:
Cash at bank	1,671	7,703	6,909
Certificates of Deposit	-	2,908	-
AAA Money Market funds	800	12	1,250
Debt due after more than one year	(19,715)	(18,599)	(19,147)
	_________	_________	_________
Net debt	(17,244)	(7,976)	(10,988)
	_________	_________	_________

  Notes:

1.	Accounting policies
	(a)	Basis of accounting
		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. The adoption of the January 2009 SORP has no effect on the financial statements of the Company, other than the requirement separately to disclose capital reserves that relate to the revaluation of investments held at the reporting date. These are disclosed in note 7. 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 have been prepared on a going concern basis.
		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 half yearly financial statements have been prepared using the same accounting policies as the preceding annual accounts.
	(b)	Dividends payable
		Interim and final dividends are recognised in the period in which they are paid.

		Six months ended	Six months ended	Year  ended
		30 November 2009	30 November 2008	31 May  2009
2.	Income	£'000	£'000	£'000
	Income from investments
	UK dividend income	366	735	1,148
	Overseas dividends	9	16	20
	Stock dividend	7	26	26
	PID dividend	7	-	13
	Fixed interest	-	-	62
		389	777	1,269
	Other income
	Convertible bonds	167	-	-
	AAA Money Market funds	2	53	57
	Deposit interest	6	102	68
	CD	9	-	117
	T-Bills	2	-	14
	Underwriting Commission	8	4	14
		194	159	270
	Total income	583	936	1,539

		Six months ended	Six months ended	Year  ended
		30 November 2009	30 November 2008	31 May  2009
3.	Return per Ordinary share	p	p	p
	Revenue return	2.18	4.08	6.47
	Capital return	13.24	(56.85)	(61.20)
	Total return	15.42	(52.77)	(54.73)
	These figures are based on the following attributable assets:
		Six months ended	Six months ended	Year ended
		30 November 2009	30 November 2008	31 May  2009
		£'000	£'000	£'000
	Revenue return	448	838	1,327
	Capital return	2,717	(11,665)	(12,557)
	Total return	3,165	(10,827)	(11,230)
	Weighted average number of Ordinary shares in issue	20,519,056	20,519,056	20,519,056

		As at	As at	As at
4.	Net asset value per share	30 November 2009	30 November 2008	31 May  2009
	Ordinary
	Attributable net assets (£'000)	11,079	9,549	8,612
	Number of Ordinary shares in issue	20,519,056	20,519,056	20,519,056
	Net asset value per share (p)	53.99	46.54	41.97
	Zero Dividend Preference
	Attributable net assets (£'000)	19,715	18,599	19,147
	Number of ZDP shares in issue	15,166,618	15,166,618	15,166,618
	Net asset value per share (p)	129.99	122.63	126.24

5.	Dividends
	Ordinary dividends on equity shares deducted from reserves are analysed below:
		Six months ended	Six months ended	Year  ended
		30 November 2009	30 November 2008	31 May  2009
	Fourth interim dividend 2009 - 2.1p (2008 - 3.3p)	431	677	677
	First interim dividend 2010 - 1.3p (2009 - 1.3p)	267	267	267
	Second interim dividend 2009 - 1.3p	-	-	267
	Third interim dividend 2009 - 1.3p	-	-	267
		698	944	1,478
	The Company has declared a second interim dividend in respect of the year ending 31 May 2010 of 1.3p net (2009 - 1.3p) per Ordinary share which will be paid on 19 February 2010 to Ordinary Shareholders on the register on 29 January 2010. This dividend has not been included as a liability in these financial statements.  The ex-dividend date is 27 January 2010.

6.      Capital reserve

        The capital reserve reflected in the Balance Sheet at 30 November 2009 includes gains of £962,000 (30 November 2008 - losses of £7,937,000; 31 May 2009 - losses of £2,824,000) which relate to the revaluation of investments held at the reporting date.

7.	Transaction costs
	During the six months ended 30 November 2009 expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Income Statement. The total costs were as follows:
		Six months ended	Six months ended	Year  ended
		30 November 2009	30 November 2008	31 May  2009
		£'000	£'000	£'000
	Purchases	21	9	11
	Sales	1	6	8
		22	15	19

8.

The financial information in this report does not comprise statutory accounts within the meaning of Section 434 - 436 of the Companies Act 2006. The financial information for the year ended 31 May 2009 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 under Section 237 (2) or (3) of the Companies Act 1985. These accounts contain no statement under Section 498 of the Companies Act 2006. The interim accounts have been prepared using the same accounting policies as the preceding annual accounts.

9.	This Half-Yearly Report was approved by the Board on 20 January 2010.

10.    The half yearly financial report is available on the Company's website, www.edinburghnewincome.co.uk and the interim report will be posted to shareholders in February 2010 and copies will be available from the Manager.

For Edinburgh New Income Trust plc

Aberdeen Asset Management Limited, SECRETARY

 

END

 

 

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