Interim Results

Edinburgh New Income Trust plc 19 January 2007 News Release 19 January 2007 EDINBURGH NEW INCOME TRUST PLC INTERIM RESULTS FOR THE SIX MONTHS TO 30 NOVEMBER 2006 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 1.2p per ordinary share payable on 16 February 2007 • The board expects to declare dividends totalling 6.6p for the year to 31 May 2007, an increase of 10% • Net asset value rose by 14.2% 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. EDINBURGH NEW INCOME TRUST CHAIRMAN'S STATEMENT I am pleased to be able to report on another satisfactory period of growth. We have benefited from further strength in the equity market in the six month period to 30 November 2006, during which the Company's net asset value per ordinary share rose by 10.3% in capital terms to 134.1p at the end of November. This compares with a rise of 7.0% in the FTSE All-Share Index. The ordinary share price rose by 13.2% to 121.5p, which reflects a narrowing in the discount to net asset value at which the shares trade. Dividends A first interim dividend of 1.2p (2005-1.0p) was declared in October and paid in November. As previously announced, a second interim dividend of 1.2p will be payable in February. These increases are with a view to reduce the disparity between the level of the first three interim dividends and the fourth interim dividend. In the absence of unforeseen circumstances, the Board intends to pay a third interim dividend of 1.2p and a fourth interim dividend of 3.0p, making a total net dividend of 6.6p for the year to 31 May 2007, an increase of 10%. Performance and Market Review The UK equity market started the period under pressure, investor sentiment having weakened following the re-appraisal of the outlook for inflation and consequently the level of interest rates. However, as the period developed, the market witnessed a steady recovery, set against a relatively benign geopolitical and economic backdrop, the latter despite the increases to UK interest rates. This, coupled to the resurgence of corporate activity, encapsulated in Iberdrola's bid for Scottish Power, allowed the market to recover all of the ground lost in the sell off earlier in the year. The net asset value for ordinary shareholders rose to 134.1p at the end of November which, taking dividends into account, represented a total return of 14.2% for the six month period. This compares with a rise in the FTSE All-Share Index of 8.6% in total return terms. The difference came from a combination of the structural gearing within the Company and good stock selection, as some of the more defensive sectors of the market came back into favour, with both utilities and telecommunications performing well. These sectors of the market tend to have higher yields-and, as such, the fund has been heavily weighted to them. The ordinary share price rose to 121.5p, a discount of 9.4%, and the price of the zero dividend preference shares (ZDP's) rose to 112.25p, a premium of 2.9% over their underlying net asset value of 109.1p. The capital cover of the ZDP's increased from 1.91x at the end of May 2006 to 2.05x. The Company has significant capital gearing through its zero dividend preference shares, which is to our benefit when share prices rise, but is to our disadvantage in falling markets. Equity investments totalled £42.4 million at the end of November, at which point effective gearing, measured by the ratio of total equity investments to ordinary shareholders funds, was 154%. Were all cash balances to be invested in shares, total potential gearing would rise to 160%. The Board has controls in place which seek to ensure that effective gearing is limited to 190%. Outlook The recent recovery in the stock market has been set against a backdrop of rising interest rates in the UK, and has been helped by the widespread corporate activity that has been a feature of the market. Looking forward, the Managers expect that the monetary tightening witnessed will start to have an impact on consumption and economic growth, which in turn is likely to moderate the rate of corporate profit and dividend growth over the coming year. This will be further compounded by the translation effect of overseas dollar earnings if the dollar remains weak. While the Managers do not consider the market to be unduly expensive, the cash position has been increased slightly since the period end as a result of these uncertainties. David Ritchie Chairman INCOME STATEMENT Six months ending 30 November 2006 (unaudited) Revenue Capital Total £000 £000 £000 Gains on held-at-fair-value investments - 3,286 3,286 Income 862 - 862 Investment management fee (83) (83) (166) Administrative expenses (64) - (64) ______ ______ ______ Net return before finance costs and taxation 715 3,203 3,918 Finance costs of ZDP Shareholders - (477) (477) ______ ______ ______ Net return on ordinary activities before and after 715 2,726 3,441 taxation ______ ______ ______ Return per Ordinary share (p) 3.48 13.29 16.77 ______ ______ ______ Period ending 30 November 2005 (unaudited) Revenue Capital Total £000 £000 £000 Gains on held-at-fair-value investments - 1,643 1,643 Income 808 - 808 Investment management fee (71) (71) (142) Administrative expenses (102) - (102) ______ ______ ______ Net return before finance costs and taxation 635 1,572 2,207 Finance costs of ZDP Shareholders - (447) (447) ______ ______ ______ Net return on ordinary activities before and after 635 1,125 1,760 taxation ______ ______ ______ Return per Ordinary share (p) 3.09 5.48 8.57 ______ ______ ______ INCOME STATEMENT Period ended 31 May 2006 (audited) 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 before finance costs and taxation 1,447 4,763 6,210 Finance costs of 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. No Statement of Total Recognised Gains and Losses has been prepared as all gains and losses have been reflected in the Income Statement. BALANCE SHEET At 30 November At 30 November At 31 May 2006 2005 2006 £000 £000 £000 (unaudited) (unaudited) (audited) Fixed assets Investments at fair value through profit or loss 42,372 35,395 38,489 ________ ________ ________ Current assets Debtors and prepayments 138 92 185 Cash at bank and in hand 1,667 2,044 2,532 ________ ________ ________ 1,805 2,136 2,717 Creditors: amounts falling due within one year (119) (122) (204) ________ ________ ________ Net current assets 1,686 2,014 2,513 ________ ________ ________ Total assets less current liabilities 44,058 37,409 41,002 Creditors: amounts falling due after more than one year Zero Dividend Preference shares (16,551) (15,614) (16,074) ________ ________ ________ Net assets 27,507 21,795 24,928 ________ ________ ________ Capital and reserves Called-up share capital 205 205 205 Special reserve 20,035 - 20,035 Share premium account - - 20,035 Capital reserve - realised 893 (412) 648 Capital reserve - unrealised 5,689 1,537 3,208 Revenue reserve 685 430 832 ________ ________ ________ Equity Shareholders' funds 27,507 21,795 24,928 ________ ________ ________ Net asset value per Ordinary share (pence) 134.06 106.22 121.49 ________ ________ ________ Reconciliation of Movements in Shareholders' Funds Six months ended 30 November 2006 (unaudited) Capital Capital Share Special reserve - reserve - capital reserve realised unrealised Revenue reserve Total £000 £000 £000 £000 £000 £000 Balance at 31 May 2006 205 20,035 648 3,208 832 24,928 Return on ordinary activities after - - 245 2,481 715 3,441 taxation Dividends paid - - - - (862) (862) Balance at 30 November 2006 205 20,035 893 5,689 685 27,507 Period ended 30 November 2005 (unaudited) Capital Capital Share Share reserve - reserve - capital premium realised unrealised Revenue reserve Total £000 £000 £000 £000 £000 £000 Issue of ordinary shares 205 20,314 - - - 20,519 Expenses of share issue - (279) - - - (279) Return on ordinary activities after - - (412) 1,537 635 1,760 taxation Dividends paid - - - - (205) (205) Balance at 30 November 2005 205 20,035 (412) 1,537 430 21,795 Period ended 31 May 2006 (audited) Special Capital Capital Share Share reserve reserve - reserve - capital premium realised unrealised Revenue reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Issue of Ordinary shares 205 20,314 - - - - 20,519 Expenses of share issue - (279) - - - - (279) Cancellation of share premium account - (20,035) 20,035 - - - - Return on ordinary activities after - - - 648 3,208 1,447 5,303 taxation Dividends paid - - - - - (615) (615) Balance at 31 May 2006 205 - 20,035 648 3,208 832 24,928 CASHFLOW STATEMENT (unaudited) Six months ended Six months Period ended 30 November 2006 ended 30 31 May 2006 November 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net total return before finance costs and 3,918 2,207 6,210 taxation Adjustment for: Gains on investments at fair value through (3,286) (1,643) (4,930) profit or loss Decrease / (increase) in accrued income 72 (82) (180) Increase in other debtors (15) (10) (5) (Decrease) / increase in other creditors (24) 118 140 Net cash inflow from operating activities 665 590 1,235 Net cash outflow from financial investment (668) (5,954) (5,701) Equity dividends paid (862) (205) (615) Net cash outflow before financing (865) (5,569) (5,081) Net cash inflow from financing - 7,613 7,613 (Decrease) / increase in cash (865) 2,044 2,532 Reconciliation of net cash flow to movement in net funds (Decrease) / increase in cash as above (865) 2,044 2,532 Net funds at 31 May 2006 2,532 - - Net funds at 30 November 2006 1,667 2,044 2,532 Represented by: Cash at bank and in hand 1,667 2,044 2,532 Notes: 1. (a) Basis of accounting The accounts have been prepared under the historical cost convention, as modified to include the revaluation of investments, and in accordance with applicable UK Accounting Standards and consistent with the Statement of Recommended Practice for 'Financial Statements of Investment Trust Companies' (December 2005). They have also been prepared on the assumption that the approval as an investment trust will continue to be granted. The accounts, and the net asset value per share figures, have been prepared in accordance with UK Generally Accepted Accounting Principles (UK GAAP). The interim accounts have been prepared using the same accounting policies as the preceding annual accounts Accounting period The Company was incorporated on 22 April 2005 and commenced operations on 31 May 2005. The comparative results are for the periods from incorporation to 30 November 2005 and 31 May 2006 not withstanding that there were no accounting entries prior to 31 May 2005 (b) Dividends payable Dividends are recognised in the period in which they are paid. 2. Dividends A first interim dividend of 1.2p per Ordinary share was paid on 10 November 2006 to Shareholders on the register on 13 October 2006. The ex-dividend date was 11 October 2006. The directors have declared a second interim dividend of 1.2p per Ordinary share which will be paid on 16 February 2007 to Shareholders on the register on 26 January 2007. The ex-dividend date is 24 January 2007. 3. The interim report will be posted to shareholders in February 2007 and copies will be available at the registered office of the Company - Donaldson House, 97 Haymarket Terrace, Edinburgh EH12 5HD. For Edinburgh New Income Trust plc Edinburgh Fund Managers plc, SECRETARY This information is provided by RNS The company news service from the London Stock Exchange

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