Edinburgh Dragon Trust PLC
12 April 2002
12 April 2002
EDINBURGH DRAGON TRUST PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED
28 FEBRUARY 2002
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 Free (ex Japan)
• The trust believes that the outlook for Asia is more promising than it
has been for many years.
• Exposure to South Korea, Malaysia and Thailand has risen at the
expense of Hong Kong.
• The trust remains undercommitted to technology companies.
• Gearing has risen to 10% reflecting targeted buying opportunities.
For further information please contact:-
Alistair Thompson, Investment Manager
Edinburgh Fund Managers plc 0131 313 1000
Chairman's Statement
Performance
Over the six months to 28 February 2002, the trust's net asset value rose 11.8%
compared with a rise of 16.4% in its benchmark index, the MSCI Combined Asia
Free ex Japan Index.
Global aggressive coordinated interest rate cuts helped equity markets rebound
after the terrorist attacks in the US, with technology companies rebounding the
furthest. In Asian markets the biggest gainers were Korea and Taiwan, which
rose 49% and 27% respectively in sterling terms.
The trust's under-performance of 4.6% against the benchmark was due to an
insufficient weighting to the Korean and Taiwanese markets and the cautious view
on technology stocks in particular, which performed strongly from the middle of
September. Partially offsetting this was the performance of companies that
have benefited from the increase in domestic demand. Kookmin Bank, National
Finance and China Insurance all generated returns in excess of 50%. Some of the
poorest performers were the large Hong Kong companies such as Sun Hung Kai
Properties and HSBC.
Recently the premium afforded to many large Hong Kong companies has not looked
justified, in view of competition from the Mainland, persistent deflation and a
weak domestic economy. As a consequence, exposure to Hong Kong has been reduced
over the last six months in favour of South Korea, Malaysia and Thailand.
Revenue
For the six months to 28 February 2002 the revenue deficit represented 0.32p per
share compared with a deficit of 0.38p for the six months to 28 February 2001.
Outlook
The outlook for Asian equity markets is more promising than it has been for many
years. The region is still regarded as a warrant on global growth, yet domestic
demand in a number of economies, particularly China, Korea, Malaysia and
Thailand, is beginning to outweigh the region's reliance on external demand and
is providing the impetus for growth over the next couple of years. Any
improvement in the global economy will only enhance the region's attractiveness.
Reflecting this optimism the trust's gearing has, since the interim period end,
risen from 3.6% to 10%,
Asian companies have been aggressively repaying debt, such that their balance
sheets are in general stronger than their western counterparts. Having been
through the credit crisis in 1997, companies are largely immune from concerns
over the credit risk of US and European businesses. Indeed, dividend payouts
are increasing in a number of markets.
High valuations of technology companies and uncertainty surrounding final demand
for technology products are our biggest concern. We remain undercommitted to
technology companies, preferring to increase exposure to medium-sized companies
with a domestic consumption focus, which are typically under-valued.
Tony Cassidy, Chairman
12 April 2002
STATEMENT OF TOTAL RETURN
for the six months to 28 February 2002 (unaudited)
Revenue Capital Total
£000 £000 £000
Net gains on investments - 20,031 20,031
Net currency gains - 79 79
Investment income 2,041 - 2,041
Interest receivable 755 - 755
Other income 2 - 2
Investment management fee (872) - (872)
Administrative expenses (241) - (241)
Net return before finance costs and taxation 1,685 20,110 21,795
Interest payable and similar charges (2,400) - (2,400)
Return on ordinary activities before taxation (715) 20,110 19,935
Taxation (4) - (4)
Return attributable to equity shareholders (719) 20,110 19,391
Return per ordinary share (0.32p) 8.87p 8.55p
Diluted return per ordinary share (0.32p) 8.90p 8.58p
_________________________________________________________________________________
STATEMENT OF TOTAL RETURN
for the six months to 29 February 2001 (unaudited)
Revenue Capital Total
£000 £000 £000
Net losses on investments - (29,307) (29,307)
Net currency gains - (1,278) (1,278)
Investment income 1,534 - 1,534
Interest receivable 1,553 - 1,553
Other income 28 - 28
Investment management fee (1,035) - (1,035)
Administrative expenses (391) - (391)
Net return before finance costs and taxation 1,689 (30,585) (28,896)
Interest payable and similar charges (2,550) - (2,550)
Return on ordinary activities before taxation (861) (30,585) (31,446)
Taxation (9) - (9)
Return attributable to equity shareholders (870) (30,585) (31,455)
Return per ordinary share (0.38p) (13.49p) (13.87p)
Diluted return per ordinary share (0.38p) (13.34p) (13.72p)
___________________________________________________________________________________
STATEMENT OF TOTAL RETURN
for the year to 31 August 2001 (audited)
Revenue Capital Total
£000 £000 £000
Net losses on investments - (76,405) (76,405)
Net currency gains - (1,570) (1,570)
Investment income 4,326 - 4,326
Interest receivable 2,499 - 2,499
Other income 93 - 93
Investment management fee (1,925) - (1,925)
Administrative expenses (600) (50) (650)
Net return before finance costs and taxation 4,393 (78,025) (76,632)
Interest payable and similar charges (4,844) - (4,844)
Return on ordinary activities before taxation (451) (78,025) (75,476)
Taxation (89) - (89)
Return attributable to equity shareholders (540) (78,205) (78,565)
Return per ordinary share (0.24p) (34.42p) (34.66p)
Diluted return per ordinary share (0.24p) (34.13p) (34.37p)
___________________________________________________________________________________
BALANCE SHEET (unaudited)
At 28 February 2002 At 31 August At 28 February 2001
2001
£000 £000 £000
Fixed assets
Investments 192,735 175,694 215,190
Current assets
Debtors 334 737 2,286
US Treasury Bills 45,792 30,840 41,197
Cash and short term deposits 24,209 24,712 21,092
70,335 56,289 64,575
Creditors: amounts falling due after more 11,516 1,508 1,840
than one year
Net current assets 58,819 54,781 62,735
Total assets less current liabilities 251,554 230,475 277,925
Creditors: amounts falling due after more 66,966 65,279 65,620
than one year
184,588 165,196 212,305
Capital and reserves
Called up share capital - equity 45,325 45,325 45,326
Other reserves 139,263 119,871 166,979
Total equity shareholders' funds 184,588 165,196 212,305
Adjusted net asset value per share 81.36p 72.80p 93.57p
Adjusted diluted net asset value per share 80.40p 72.22p 92.06p
CASHFLOW STATEMENT
(unaudited)
For the six months For the six months to For the year
to to
28 February 2002 29 February 2001 31 August 2001
£000 £000 £000
Revenue before finance costs and taxation 1,685 1,689 4,393
Decrease in accrued income 216 197 217
Decrease in other debtors 33 45 57
Increase in creditors 2 9 (117)
Expenses charged to capital - - (50)
Net cash inflow from operating activities 1,936 1,940 4,500
Net cash outflow from servicing of finance (2,401) (2,377) 94847)
Total tax paid 149 93 (2)
Net cash inflow from financial investment 13,012 27,080 21,012
Net cash inflow before financing 12,696 26,736 20,663
Net cash inflow from financing 1 (347) (347)
Management of liquid resources (13,184) (23,996) (13,586)
DECREASE IN CASH AND CASH EQUIVALENTS (487) 2,393 6,730
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 2001 have been
applied
2. There will be no interim dividend for the year to 31 August
2002; shareholders are reminded that the objective of the company is long term
capital appreciation.
3. As at 28 February 2002, there were 226,628,835 ordinary shares
and 10,648,040 warrants in use..
4. The financial information for the year ended 31 August 2001, has
been extracted from the Annual report and accounts of the company which have
been filed with the Registrar of Companies. The auditor's report on those
accounts was unqualified.
5. The statement of total return and balance sheet set out do not
represent full accounts in accordance with Section 240 of the Companies Act
1985.
.
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
Company Secretary
END
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