Final Results

24 MAY 2005 THE EDINBURGH INVESTMENT TRUST plc PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2005 The Edinburgh Investment Trust plc is one of the UK's largest investment trusts focussed entirely on the UK. The long term objectives of The Edinburgh Investment Trust plc are the achievement of capital growth at a higher rate than the FTSE All-Share Index and dividend growth above the rate of UK inflation. Key points * NAV total return of 16.3% compared with an increase in the FTSE All-Share of 15.6% (0.7 percentage points ahead) * Share price total return of 14.7% * Final dividend of 8.95p per share maintained giving a total yield of 4% (based on the latest share price) which is almost 30% higher than the yield on the FTSE All-Share * Performance assisted by: * + Positive stock selection in eight out of the ten main industry groups + Continuing overweight exposure to FTSE 250 securities + o Against this background, the Board believes that the Edinburgh Investment Trust provides an attractive vehicle for long-term investment in the UK equity market. Please note that past performance is not a guide to future returns. The value of investments can go down as well as up and may be affected by exchange rate fluctuations. For further information please contact: Fidelity Investments International Anne Read 020 7961 4409 Charles Payne 020 7961 4616 Issued by Fidelity Investments International. Authorised and regulated by the Financial Services Authority. CB22811 CHAIRMAN'S STATEMENT Capital Performance I reported at the interim stage that the UK equity market as a whole had made little progress in the first five months of the year from April 2004, and that much of the growth in performance seen at that time had occurred in the month of September. This buoyant environment continued for the next three months to the end of calendar 2004 after which the market moved sideways before falling back in the last few weeks of the financial year to March 2005. Overall the FTSE All-Share Index (capital only) rose by 11.9% in the year under review, or 15.6% on a total return basis. Against this background, the Company modestly exceeded its capital performance objective. Net Asset Value per share (`NAV') with debt at par increased by 12.7%, some 0.8% more than the benchmark Index. NAV with debt marked to market increased more significantly, by 14.1%. On a total return basis, NAV increased by 16.3% and 17.9% respectively, compared to an increase of 15.6% in the comparable Index. Income Performance I have explained in previous statements that lack of dividend cover has led the Board from October 2003 to recommend maintaining the dividend at the previous level rather than increasing it in line with the Company's objective. In the year to March 2004 the Company paid dividends which exceeded net income by £ 2.1m. I reported at that time that this deficit was less than originally anticipated because two of our large investments declared dividends, totalling about £1.1m, with an ex-dividend date earlier than in previous years. These dividends fell into last year's income, where normally they might have been expected to be recorded in the year under review. Thus, without this `one off' benefit last year's deficit would have been £3.2m. In the current year to 31 March 2005 the income deficit has fallen to £1.8m. Despite this underlying improvement, the Board does not believe it would be appropriate at this time to recommend any increase in the final dividend. The £1.8m deficit will be charged to revenue reserves which after this transfer exceed £32m. Subject to shareholder approval at the Annual General Meeting, an unchanged final dividend of 8.95 pence per share will be paid on 22 July 2005 to shareholders on the register at close of business on 3 June (ex-dividend date will be 1 June 2005). If the final dividend is approved by shareholders, the year's total payment will be 13.15 pence per share. At the share price at the close of business on 23 May 2005 this is equivalent to a yield of 4% - about 30% above the 3.13% yield of the FTSE All-Share Index on the same date. Looking to the future, the Board is conscious of the importance of dividend income to shareholders and will begin to increase payments as soon as it feels that it would be prudent to do so. Share Price Although the share price performed well for most of the period, it weakened, relative to the market, towards the end of the year, particularly in March. Overall, the share price rose by 9.7% during the year, implying an increase from 10.5% to 13.9% in the discount to NAV (debt marked to market). This tendency to widening discounts which has been seen by others in the Company's peer group of large investment trusts reflects, inter alia, weak demand from personal savers in what had historically been the tax-driven peak season for share buying. It underlines the importance of the Manager's increasing commitment to promote the benefits of the Company to potential new investors. The Board also sees merit in buying back shares for cancellation where this reduces the oversupply which exists in the market from time to time, and also increases the NAV for the benefit of remaining shareholders. During the year the Company bought back 3.35 million shares (1.4% of those outstanding), enhancing NAV by 0.3%. Subsequent to the year end a further 750,000 shares were acquired for cancellation on 17 May enhancing NAV by a further 0.07%. A special resolution to renew the Board's powers in this regard will be proposed at the Annual General Meeting. Portfolio Structure and Risk Factors I advised shareholders at the interim stage that the Company's portfolio had been re-allocated within Fidelity from four to three managers. This change was made to provide an increase both in the income generated by the fund and in overall portfolio risk, the latter with the objective of creating more potential for out-performance without undue volatility. In 2003 the Board agreed with the Manager that an amount of the Company's borrowings within the range £80-120m was to be invested in the equity market. This range was reviewed during the year and increased to £90-130m. On average, gearing of marginally more than £100m was utilised during the year. The Board will continue carefully to monitor the position of the two Debenture Stocks. We remain currently of the view that redemption on the terms available at present are not in the long-term interests of shareholders. The Board Eileen Mackay who has served as a Director since 1996 and more recently as Senior Independent Director has, to the regret of her colleagues, decided not to stand for re-election at the Annual General Meeting. Eileen has made a significant contribution to the Company and we shall all miss her strong intellect, applied always in a thoroughly practical manner. I would like to thank her on behalf of shareholders and the Board for all she has done for the Company and for the support which she has given to me personally. The Board has appointed Richard Barfield as Senior Independent Director, with effect from 20 July 2005. We have today announced that Sir Nigel Wicks has been appointed to the Board with effect from 24 May 2005. After industrial experience with British Petroleum, Sir Nigel had a distinguished career in the Civil Service, retiring in 2000 as Second Permanent Secretary (International Finance), H.M. Treasury. More recently, he served as Chairman of the Committee for Standards in Public Life, and remains Deputy Chairman of Euroclear plc, and a non-executive director of Morgan Stanley Bank International Ltd. I am confident that Sir Nigel's knowledge and experience will strengthen the Board, and we all look forward to working with him. Prospects There are increasing concerns about growth in the UK economy which has historically been highly dependent on consumer spending. On the other hand, commentators are now more sanguine about the trend in interest rates, and overall regard the UK as one of the more defensive of the major world economies. Despite the benchmark index growing by over 50% since mid-March 2003, the UK equity market is regarded as good value relative to the US and major European markets. Corporate earnings generally appear to be soundly based and the Manager's own forecasts are for continuing strong increases in cash flow and dividends from the companies in the underlying portfolio. Against this background, the Board believes that the Edinburgh Investment Trust provides an attractive vehicle for long-term investment in the UK equity market. Scott Dobbie Chairman 24 May 2005 THE EDINBURGH INVESTMENT TRUST plc Statement of Total Return for the year ended 31 March 2005 2004 revenue capital total revenue capital total (1) (1) notes £'000 £'000 £'000 £'000 £'000 £'000 Realised gains on - 68,289 68,289 - 3,550 3,550 investments Increase in - 57,199 57,199 - 216,610 216,610 unrealised appreciation TOTAL CAPITAL - 125,488 125,488 - 220,160 220,160 GAINS ON INVESTMENTS Currency losses - (22) (22) - - - Income from investments: - franked 32,528 - 32,528 33,931 - 33,931 investment income - other 393 - 393 150 - 150 investment income Interest 497 - 497 265 - 265 receivable on short term deposits Income from other 2 3,881 - 3,881 3,022 - 3,022 securities Underwriting 1 - 1 5 - 5 commission Investment (953) (2,223) (3,176) (870) (2,030) (2,900) management fee Administrative (797) - (797) (872) - (872) expenses NET RETURN BEFORE 35,550 123,243 158,793 35,631 218,130 253,761 FINANCE COSTS AND TAXATION Interest payable (5,850) (13,651) (19,501) (5,850) (13,651) (19,501) and similar charges RETURN ON ORDINARY 29,700 109,592 139,292 29,781 204,479 234,260 ACTIVITIES BEFORE TAX Tax on ordinary (40) - (40) (10) - (10) activities RETURN ON ORDINARY 29,660 109,592 139,252 29,771 204,479 234,250 ACTIVITIES AFTER TAX FOR THE YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS Dividends (31,420) - (31,420) (31,927) - (31,927) TRANSFER (FROM)/TO (1,760) 109,592 107,832 (2,156) 204,479 202,323 RESERVES RETURN PER 3 12.36p 45.65p 58.01p 12.26p 84.22p 96.48p ORDINARY SHARE TOTAL DIVIDEND PER 13.15p 13.15p ORDINARY SHARE 1. The revenue column on this statement represents the profit and loss account of the Company. 2. Income arising from the Fidelity Institutional Cash Fund. 3. Returns per ordinary share are based on the net revenue return on ordinary activities after taxation of £29,660,000 (2004: £29,771,000), and the capital appreciation in the year of £109,592,000 (2004: £204,479,000) and on 240,061,646 ordinary shares (2004: 242,796,714) being the weighted average number of ordinary shares in issue during the year. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. THE EDINBURGH INVESTMENT TRUST plc Balance Sheet as at 31 March 2005 2004 £'000 £'000 FIXED ASSETS Investments 1,098,015 1,015,783 CURRENT ASSETS Debtors 12,394 12,170 Fidelity Institutional Cash Fund 80,060 71,736 Amounts held at futures clearing 174 1,394 houses and brokers Cash at bank 23,675 6,122 116,303 91,422 CREDITORS - AMOUNTS FALLING DUE (36,945) (28,212) WITHIN ONE YEAR NET CURRENT ASSETS 79,358 63,210 TOTAL ASSETS LESS CURRENT LIABILITIES 1,177,373 1,078,993 CREDITORS - AMOUNTS FALLING DUE AFTER (195,603) (195,352) MORE THAN ONE YEAR TOTAL NET ASSETS 981,770 883,641 CAPITAL AND RESERVES Called up share capital 59,862 60,699 Share premium 6,639 6,639 Capital redemption reserve 13,593 12,756 Capital reserve - realised 716,352 666,475 Capital reserve - unrealised 153,017 103,005 Revenue reserve 32,307 34,067 TOTAL EQUITY SHAREHOLDERS' FUNDS 981,770 883,641 NET ASSET VALUE PER ORDINARY SHARE: 408.18p 362.03p Cash Flow Statement For the year ended 31 March 2005 2004 £'000 £'000 NET CASH INFLOW FROM OPERATING ACTIVITIES 34,375 32,704 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest paid (19,250) (19,250) NET CASH OUTFLOW FROM SERVICING OF FINANCE (19,250) (19,250) FINANCIAL INVESTMENT Purchase of investments (662,035) (411,769) Exchange losses (22) - Disposal of investments 713,320 429,724 Realised losses on short futures positions closed (260) (3,452) Realised gains on long futures positions closed 19 - NET CASH INFLOW FROM FINANCIAL INVESTMENT 51,022 14,503 EQUITY DIVIDENDS PAID (31,787) (31,927) NET CASH INFLOW/(OUTFLOW) BEFORE USE OF LIQUID 34,360 (3,970) RESOURCES AND FINANCING NET CASH OUTFLOW FROM MANAGEMENT OF LIQUID (8,324) (3,322) RESOURCES NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING 26,036 (7,292) FINANCING Repurchase of ordinary shares (9,703) - NET CASH OUTFLOW FROM FINANCING (9,703) - INCREASE/(DECREASE) IN CASH 16,333 (7,292) Notes 1. The Directors recommend that a final dividend of 8.95p (2004 - 8.95p) per ordinary share be paid. The final dividend will be paid on 22 July 2005 to shareholders on the register on 3 June 2005. The ex-dividend date is 1 June 2005. 2. The financial information for the year ended 31 March 2004 has been extracted from the annual report and accounts of the Company which have been filed with the Registrar of Companies and on which the auditors' report was unqualified. 3. The statutory accounts for the year ended 31 March 2005 which contain an unqualified audit report will be delivered to the Registrar of Companies following the Company's Annual General Meeting which will be held at The Weston Link, National Galleries of Scotland, Princes Street, Edinburgh on Wednesday 20 July 2005 at 2.30 pm. The accounts have been prepared under the same accounting policies used for the year ended 31 March 2004. 4. The statement of total return (incorporating the revenue account), balance sheet and cashflow set out above do not represent full accounts in accordance with Section 240 of the Companies Act 1985. The accounts have been prepared in accordance with the Statement of Recommended Practice: `Financial Statements of Investment Trust Companies' dated January 2003. 5. The annual report will be posted to shareholders on or about 14 June 2005 and copies will be available from the Secretary - Fidelity Investments International, Oakhill House, 130 Tonbridge Road, Hildenborough, Tonbridge, Kent, TN11 9DZ.

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