Interim Results

City Natural Res High Yield Tst PLC 08 March 2006 To: RNS From: City Natural Resources High Yield Trust plc Date: 8 March 2006 Unaudited results for the six month ended 31 December 2005 • Net asset value total return of 92.6 per cent since 1 August 2003 compared to a total return of 78.5 per cent from the benchmark index • Ordinary Share price total return since 1 August 2003 of 82.2 per cent • Discount of 6.4 per cent to fully diluted net asset value The Chairman, Geoff Burns, said: Investment Performance | 'I am pleased to report a further increase in the Company's net asset value. During the period it rose from 80.9 pence to 95.8 pence, an increase of 18.4 per cent, while the share price rose from 77.8 pence to 90.0 pence, 15.7 per cent ahead. In addition, two dividends of 0.5 pence per share were declared, the same level as last year, reinforcing the capital return. The Company got off to a flying start in 2006, with the 13.6 per cent increase in net asset value in January representing its best ever month. This saw both net asset value and share price exceed £1.00 per share, and took the net asset value total return to 124 per cent since 1 August 2003 when the reconstruction of the investment portfolio was completed following the change to the Company's investment objective. The composite benchmark index rose by 97 per cent during the same period. Investment Strategy | As the bull market in the natural resource sector has continued, so has the fund manager's strategy of taking full advantage of the capital growth opportunities available. At the same time the quarterly dividend of 0.5 pence per share has been maintained. Two features of the period are, perhaps, worth highlighting. The first is the way in which the ratings of the small and medium sized resource stocks in which the Company specialises lagged the large cap market leaders during the first part of the year, before out performing them latterly as the value that they represented was realised. Secondly, my predecessor remarked on the quiet times being experienced in the bullion sector in his annual statement last year. The fund manager used this period to add significantly to our exposure to precious metals. This move was rewarded by a period of sustained excitement which saw the gold price move to levels well beyond US$500. It shows no sign of retreating. Accounting Changes | The Company has moved to a regime known as 'Revised UK GAAP' this year, the new industry standard. The changes are mainly cosmetic, but the move to valuing investments at bid price rather than mid price resulted in the net asset value being 1.5 pence lower than otherwise would have been the case. The other significant change relates to dividends, which are not now recorded in the financial statements until they are paid. This added 0.5 pence to the net asset value at the period end. Outlook | After the rises seen in the natural resource markets over recent months, it would not be surprising if we saw a pause for breath and some consolidation. That said the gold price remains firm, and there is absolutely no sign of weakness in base metals. The bull market is very much intact, although we may see increased volatility during the second half of the year.' Enquiries: Richard Lockwood Investment Manager New City Investment Managers Limited Tel: 0207 557 4370 Martin Cassels Company Secretary F&C Asset Management plc Tel: 0131 465 1000 Unaudited Statement of Total Return for the six months ended 31 December 2005 2005 2005 2005 Revenue Capital Total £'000 £'000 £'000 Realised losses on investments - (184) (184) Increase in fair value of investments held - 10,253 10,253 Exchange losses - (115) (115) Income 1,437 - 1,437 Investment management fee (94) (282) (376) Other expenses (87) - (87) Net return before finance costs and taxation 1,256 9,672 10,928 Interest payable (115) (272) (387) Net return on ordinary activities before taxation 1,141 9,400 10,541 Tax on ordinary activities (283) 173 (110) Net return on ordinary activities after taxation 858 9,573 10,431 Return per share (pence) 1.36 15.23 16.59 Amounts recognised as dividends in the period Six months Six months ended ended 31 December 31 December 2005 2004 £'000 £'000 Fourth interim dividend for the year ended 30 June 2004 of 0.5p per share - 314 First interim dividend for the year ended 30 June 2005 of 0.5p per share - 314 Fourth interim dividend for the year ended 30 June 2005 of 0.5p per share 314 - First interim dividend for the year ended 30 June 2006 of 0.5p per share 314 - 628 628 Unaudited Statement of Total Return for the six months ended 31 December 2004 2004 2004 2004 Revenue Capital Total (restated) (restated) (restated) £'000 £'000 £'000 Realised gains on investments - 7,222 7,222 Increase in fair value of investments held - 1,544 1,544 Exchange losses - (149) (149) Income 1,141 - 1,141 Investment management fee (76) (230) (306) Other expenses (150) - (150) Net return before finance costs and taxation 915 8,387 9,302 Interest Payable (72) (215) (287) Net return on ordinary activities before taxation 843 8,172 9,015 Tax on ordinary activities (208) 142 (66) Net return on ordinary activities after taxation 635 8,314 8,949 Return per share (pence) 1.01 13.23 14.24 Balance Sheet 31 December 30 June 31 December 2005 2005 2004 (unaudited) (restated) (restated) £'000 £'000 £'000 Fixed assets Investments 74,645 61,607 60,024 Current assets Debtors 862 1,152 782 Cash at bank and on deposit 440 443 840 1,302 1,565 1,622 Creditors: amounts falling due within one year (15,316) (12,374) (13,582) Net current liabilities (14,014) (10,779) (11,960) Net Assets 60,631 50,828 48,064 Capital and reserves Called-up share capital 15,714 15,714 15,714 Special distribution reserve 30,386 30,386 30,386 Warrant reserve 2,353 2,353 2,353 Other reserves: Capital reserve - realised (2,846) (4,683) (6,666) Capital reserve - unrealised 14,119 6,385 5,761 Revenue reserve 905 673 516 Equity shareholders' funds 60,631 50,828 48,064 Net asset value per share (pence) 95.77 80.86 76.47 Reconciliation of Movements in Shareholders' Funds Six months Six months ended ended 31 December 31 December 2005 2004 £'000 £'000 Equity shareholders' funds at 1 July 51,321 39,971 Less revaluation of investments from mid to bid prices (807) (542) Add dividends accrued 314 314 Equity shareholders' funds at 1 July (as restated) 50,828 39,743 Return on ordinary activities after taxation 10,431 8,949 Dividends paid (628) (628) Equity shareholders' funds at 31 December 60,631 48,064 Summarised Statement of Cash Flows Six months ended Six months ended 31 December 2005 31 December 2004 (unaudited) (restated) £'000 £'000 Net cash inflow from operating activities 684 740 Net cash outflow from servicing of finance (436) (276) Taxation recovered 5 - Net cash outflow from financial investment (2,428) (1,050) Equity dividends paid (628) (942) Net cash outflow before financing (2,803) (1,528) Net cash inflow from financing 2,800 2000 (Decrease) / increase in cash (3) 472 Reconciliation of net cash flow to movement in net debt (Decrease) / increase in cash (3) 472 Cash inflow from drawdown of loans (2,800) (2,000) Movement in net debt in the period (2,803) (1,528) Opening net debt at 1 July (11,557) - Closing net debt at 31 December (14,360) (1,528) Represented by: Cash at bank 440 840 Debt falling due within one year (14,800) (12,000) (14,360) (11,160) Reconciliation of operating revenue to net cash flow from operating activities Net revenue before interest payable and taxation 10,928 9,302 (Gains) / losses on investments (10,069) (8,766) Decrease/(increase) in accrued income (7) 202 Decrease/(increase) in other debtors (66) 6 (Decrease) / increase in other creditors (45) 18 Overseas witholding tax suffered (57) (22) Net cash inflow from operating activities 684 740 Notes 1. The return per Ordinary share is based on a net revenue on ordinary activities after taxation of £10,431,000 (2004 - £8,949,000) and on 62,857,143 (2004 - 62,857,143) Ordinary shares being the weighted average number of Ordinary shares in issue during the period. Fully diluted returns calculated on the basis set out in Financial Reporting Standard 14 'Earning per share' indicate that the exercise of warrants in issue would have no dilutive effect on returns. 2. During the year the Company did not issue any shares nor did the Company purchase any shares for cancellation. The basic net asset value per Ordinary share is based on net assets at the end of the period of £60,631,000 (31 December 2004 - £50,828,000, 30 June 2005 - £48,064,000) and on 62,857,143 Ordinary shares (31 December 2004 - 62,857,143, 30 June 2005 - 62,857,143), being the total number of Ordinary shares in issue at the end of the period. The basic net asset value per Ordinary share at 31 December 2005 is 96.46p. The fully diluted net asset value per Ordinary share for 31 December 2004 and 30 June 2005 has not been calculated as it has been assumed that the 4,000,000 outstanding Warrants at each period end would not have been exercised, as the exercise price of 85p exceeded the undiluted net asset value. The fully diluted net asset value per Ordinary share at 31 December 2005 is 95.77p. 3. The Board declared a second interim dividend of 0.5p per share which was paid on 24 February 2006 to shareholders on the register on 27 January 2006, having an ex-dividend date of 25 January 2006. 4. These are not full statutory accounts in terms of Section 240 of the Companies Act 1985. The full audited accounts for the year to 30 June 2005, on which the auditors report was unqualified, have been lodged with the Registrar of Companies. The 2006 interim report, on which the auditors report was unqualified, will be sent to shareholders during March 2006 and will be available for inspection at 80 George Street, Edinburgh EH2 3BU, the registered office of the Company. This information is provided by RNS The company news service from the London Stock Exchange

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