Final Results

Edinburgh New Income Trust plc 14 July 2006 News Release 14 July 2006 EDINBURGH NEW INCOME TRUST PLC PRELIMINARY RESULTS FOR THE PERIOD TO 31 MAY 2006 Edinburgh New Income Trust'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. • Fourth interim dividend of 3.0p per ordinary share payable on 18 August 2006, making a total dividend for the period of 6.0p • Net asset value rose by 26.9% on a total return basis For further information, please contact: Stewart Methven, Investment Manager, Edinburgh Fund Managers plc Tel: 0131 313 1000 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. CHAIRMAN'S STATEMENT It is with pleasure that I report to shareholders on the first year of the Company's life following its launch as the successor vehicle to Edinburgh Income and Value Trust plc and Edinburgh High Income Trust plc. At launch, total assets less current liabilities totalled £35.4 million and the net asset value per ordinary share, after allowing for initial expenses, was 98.6p. The year has been a good one for shareholders and despite the late setback in the UK stockmarket, total assets less current liabilities rose to £41.0 million at 31 May 2006 and the net asset value per ordinary share to 121.5p. Dividends The Board is pleased to announce a fourth interim dividend of 3.0p which will be paid on 18 August 2006 to ordinary shareholders on the register on 28 July 2006. This is in addition to the first interim dividend of 1.0p, declared in October and paid in November, the second interim dividend of 1.0p declared in January and paid in February and the third interim dividend of 1.0p declared in April and paid in May. The total dividend for the period to 31 May 2006 has reached the 6.0p anticipated at the time of launch. Dividend growth in the portfolio has been strong, and our revenue return per ordinary share for the period to 31 May 2006 was 7.1p. Performance Although it has been a strong year, it has also been unusual in that stockmarket leadership was narrowly focussed on mining and resource shares for much of the period, and our dividend income requirements meant that in the first half of the year we were under-represented in some of the stronger performing areas. As stockmarket performance broadened out and we were able to benefit from corporate activity benefiting stocks in the portfolio, the fund had a stronger second half. The net asset value for ordinary shareholders rose to 121.5p at the end of May, which represented a total return of 26.9% for the year, compared with 21.3% for the FTSE All-Share Index. At the end of the period, the ordinary share price stood at 107.25p, a discount of 11.7% to the net asset value. The zero dividend preference share price rose to 106.0p, in line with its underlying net asset value of 106.0p. The capital cover of the ZDPs increased from 1.65x to 1.91x at 31 May 2006. Shareholders will be aware that the Trust has significant capital gearing through its zero dividend preference shares, and while this is to our benefit when share prices rise, the effect of gearing will exacerbate the downside in falling markets. At the end of May, equity investments totalled £38.5 million, which resulted in a ratio of total equity investments to ordinary shareholders funds of 154.4%. Total potential gearing, which compares total assets to ordinary shareholders funds, was 164.5%. The Board has controls in place which seek to ensure that effective gearing is limited to 190%. Outlook The recent falls in world stockmarkets serve as a timely reminder that risks remain, with concerns on inflation clearly being shared by both the Bank of England and the Federal Reserve. Should interest rates rise further, there must be some impact on future profit and dividend growth. However, we take comfort from the fact that balance sheets are in good shape and companies are earning high returns on capital, and they continue to expect reasonable dividend growth going forward. Measured against bonds, they believe equities do not look expensive, and while markets may be affected by interest rate expectations in the short run, our Managers remain positive as they look further ahead. Manager David Binnie announced his retirement from Aberdeen Asset Managers in the course of the year, and again I would like to take the opportunity to thank him for his hard work both for this Company and its predecessor vehicles. He has been replaced by Stewart Methven, who was the Company's co-manager, who will be assisted by Charles Luke. Annual General Meeting The Company's Annual General Meeting takes place on 5 October 2006 and on behalf of the Board I encourage shareholders to attend. David Ritchie Chairman The audited results for the period 31 May 2005 to 31 May 2006 are as follows: INCOME STATEMENT Period ended 31 May 2006 Revenue Capital Total £'000 £'000 £'000 Gains on investments - 4,930 4,930 Income 1,778 - 1,778 Investment management fee (149) (149) (298) Administration expenses (182) (18) (200) _________ _________ _________ Net return on ordinary activities before finance costs and taxation 1,447 4,763 6,210 Finance costs of the ZDP shareholders - (907) (907) _________ _________ _________ Net return on ordinary activities before and after taxation 1,447 3,856 5,303 _________ _________ _________ Return per Ordinary share (pence) 7.05 18.79 25.84 _________ _________ _________ The total column of this statement represents the profit and loss account of the company. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period. A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement. BALANCE SHEET (audited) As at 31 May 2006 £'000 Non-current assets Investments at fair value through profit or loss 38,489 Current assets Debtors and prepayments 185 Cash and short term deposits 2,532 __________ 2,717 Creditors: amounts falling due within one year (204) Net current assets __________ 2,513 __________ Total assets less current liabilities 41,002 Creditors: amounts falling due in more than one year (16,074) __________ Net assets 24,928 __________ Share capital and reserves Called-up share capital 205 Special reserve 20,035 Capital reserve - realised 648 Capital reserve - unrealised 3,208 Revenue reserve 832 __________ Ordinary Shareholders' Funds 24,928 __________ Net asset value per ordinary share (pence) 121.5 __________ RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (audited) For the period ended 31 May 2006 Share Capital Capital Share premium Special reserve reserve Revenue capital account reserve Realised Unrealised reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Return on ordinary activities after - - - 648 3,208 1,447 5,303 taxation Dividends paid - - - - - (615) (615) Issue of Ordinary shares 205 20,314 - - - - 20,519 Expenses of share issue - (279) - - - - (279) Cancellation of share premium account - (20,035) 20,035 - - - - _______ _______ _______ _______ _______ _______ _______ Balance at 31 May 2006 205 - 20,035 648 3,208 832 24,928 _______ _______ _______ _______ _______ _______ _______ CASHFLOW STATEMENT (audited) Period ended 31 May 2006 £'000 £'000 Net cash inflow from operating activities 1,235 Financial investment Purchases of investments (12,675) Sales of investments 6,974 Net cash outflow from financial investment ________ (5,701) Equity dividends paid (615) ________ Net cash outflow before financing (5,081) Financing Share issue proceeds 7,892 Share issue expenses (279) Net cash inflow from financing ________ 7,613 ________ Increase in cash 2,532 ________ Reconciliation of net cash flow to movements in net funds Increase in cash as above 2,532 Net funds at 31 May 2005 - ________ Net funds at 31 May 2006 2,532 ________ Notes: 1. Basis of accounting The financial statements have been prepared on a going concern basis and in accordance with applicable UK Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice for 'Financial Statements of Investment Trust Companies' (December 2005). They have also been prepared on the assumption that approval as an investment trust will be granted. The new Financial Reporting Standards, issued as part of the programme to converge UK GAAP with International Financial Reporting Standards (IFRS), were applicable for the accounting period ended 31 May 2006. Accounting period The Company was incorporated on 22 April 2005 and commenced operations on 31 May 2005. The results are for the period from incorporation to 31 May 2006 not withstanding that there were no accounting entries prior to 31 May 2005. Valuation of investments Investments have been designated upon initial recognition as fair value through the profit or loss. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time frame established by the market concerned, and are initially measured as fair value. Subsequent to initial recognition, investments are valued at fair value. For listed investments, this is deemed to be bid market prices or closing prices for SETS (London Stock Exchange's electronic trading service) stocks sourced from The London Stock Exchange. Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Income Statement and are ultimately recognised in the unrealised reserve. Income Income from investments, including taxes deducted at source, is included in revenue (other than special dividends) by reference to the date on which the investment is quoted ex dividend. Special dividends are credited to capital or revenue, according to the circumstances. Short term deposit interest is dealt with on an accruals basis. Expenses All expenses are accounted for on an accruals basis. Expenses are charged through the Income Statement except as follows: - transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the income statement. - the Company charges 50% of investment management fees to capital, in accordance with the Board's expected long term return in the form of capital gains and income respectively from the investment portfolio of the Company. Taxation Deferred tax Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the balance sheet date measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying temporary differences can be deducted. Temporary differences are differences arising between the Company's taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods. Due to the Company's status as an investment trust company, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. Capital reserves- Realised Gains or losses on investments realised in the year that have been recognised in the Income Statement are transferred to the realised capital reserve. In addition, any prior unrealised gains or losses on such investments are transferred from the unrealised capital reserve to realised capital reserve on disposal of the investment. Capital reserves - Unrealised Increases and decreases in the fair value of investments are recognised in the Income Statement and are then transferred to the unrealised capital reserve. 2. The fourth interim dividend of 3.0p per share will be paid on 18 August 2006 to shareholders on the register at the close of business on 28 July 2006. The ex-dividend date is 26 July 2006. 3. The income statement, balance sheet, reconciliation of movement in shareholders' funds and the cashflow statement set out above do not represent full financial statements in accordance with Section 240 of the Companies Act 1985 and are based on the financial statements for the period ended 31 May 2006. The statutory financial statements for 2006 are unqualified and will be delivered to the Registrar of Companies. 4. The Annual Report and Accounts will be posted to shareholders in July 2006 and copies will be available from the investment manager. For Edinburgh New Income Trust plc Edinburgh Fund Managers plc, Company Secretary END This information is provided by RNS The company news service from the London Stock Exchange FFWDSMSEFW

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