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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