Final Results

RNS Number : 5918E

New City High Yield Fund Limited

29 September 2008

To: RNS

Date: 29 September 2008

From: New City High Yield Fund Limited

Audited results for the period from 17 January 2007 (date of incorporation) to 30 June 2008

· Net asset value total return of 2.4 per cent, since launch on 7 March 2007.

· Ordinary share price total return of 3.7 per cent, since launch on 7 March 2007.

· Dividend yield of 6.8 per cent, based on dividends at an annualised rate of 3.57p and a share price of 52.5p at 30 June 2008.

· Ordinary share price at a premium of 2.9 per cent to net asset value at 30 June 2008.

· £15 million raised in March 2007 through a placing and offer for subscription, in addition to the rollover of New City High Yield Trust plc shareholders’ interests of £53 million into the Company.

· £1.8 million and £4.7 million raised in December 2007 and February 2008 respectively, through placings with both existing and new investors.

Jimmy West, the Chairman said:

'Investment Performance

Investment markets, both in the UK and abroad have been difficult throughout the Company's life. The UK economy and sterling have weakened further since my last Interim report, and uncertainty remains in many markets whether equity or debt.

Against this backdrop, it is pleasing to report a net asset value total return of 2.4 per cent and a share price total return of 3.7 per cent since launch on 7 March 2007. As noted in the last Interim report, the Manager had concerns regarding the prospect for sterling. As such, the balance of the investment portfolio was changed, with nearly half of the portfolio now invested outside the UK. Given the fall in sterling, these concerns were well founded. The realignment of the portfolio has therefore helped both the net asset value and the investment income stream.

Dividends

In the first financial period to 30 June 2008, the Company paid four interim dividends of 0.85p per share and a further 1.02p per share was paid after the period end, on 29 August 2008. Based on an annualised rate of 3.57p and a share price of 52.5p at the period end, this represents a yield of 6.8 per cent. The annualised rate of 3.57p per share compares favourably, and is 27.5% higher than the previous annual rate of 2.8p per share within New City High Yield Trust plc. This has also been achieved alongside a significant increase in our revenue reserve equivalent to 1.05p per share.

Launch of the Company and Fundraisings

As noted within the Interim Reports the Company was launched on 7 March 2007 following the voluntary winding up of New City High Yield Trust plc and the rollover of its shareholders' interests (£53 million) into the Company. The objective of this transaction was to enhance net distributable income and increase investment flexibility. In this first period, as is illustrated above, we have been able to increase net distributable income which has justified the rollover of assets into this Jersey domiciled company.

The objective of New City High Yield Fund Limited is to provide investors with a high dividend yield and the potential for capital growth by investing mainly in high yielding fixed interest securities.

The appeal of the investment remit, and the Company's success in delivering it, has been evidenced by three fund raisings; £15 million was raised from new and existing shareholders pursuant to a placing at the time of launch, £1.8 million was raised in December 2007 and a further £4.7 million was raised in February 2008.

Outlook

Market conditions have been and remain exceptionally difficult; however we believe that the ongoing credit crunch will continue to provide opportunities to invest in new bond issues with, where possible, equity participation.'

Enquiries:

Richard Lockwood, New City Investment Managers: 020 7201 5365

Graeme Ross, Company Secretary: 01534 825 236

Audited Income Statement

Period from 17 January 2007 (date of incorporation) to 30 June 2008

	Period to 30 June 2008
	Revenue	Capital	Total
	£'000	£'000	£'000

Losses on investments	-	(4,858)	(4,858)
Exchange losses	-	(153)	(153)
Income	9,685	-	9,685
Investment management fee	(666)	(222)	(888)
Other expenses	(462)	(6)	(468)
Net return before finance costs and taxation	8,557	(5,239)	3,318

Interest payable and similar charges	(1,069)	(356)	(1,425)
Return on ordinary activities before taxation	7,488	(5,595)	1,893

Irrecoverable withholding tax	(161)	-	(161)
Return on ordinary activities after taxation	7,327	(5,595)	1,732


Return per ordinary share (pence)	5.62p	(4.29)p	1.33p

The 'Total' column of this statement is the profit and loss account of the Company.

All revenue and capital items in the above statement are derived from continuing operations.

The Company was incorporated on 17 January 2007 and launched on 7 March 2007.

Audited Balance Sheet as at 30 June 2008

		As at 30 June 2008
		£'000

Fixed assets
Investments		83,461

Current assets
Debtors		2,400
Cash at bank		2,103
		4,503
Creditors: amounts falling due within one year		(16,840)
Net current liabilities		(12,337)
Net Assets		71,124

Share capital and reserves
Stated capital account		23,452
Special distributable reserve		50,385
Capital reserves		(5,595)
Revenue reserve		2,882
Equity shareholders' funds		71,124


Net asset value per ordinary share (pence)		51.03p

Audited Reconciliation of Movements in Shareholders' Funds

Period from 17 January 2007 (date of incorporation) to 30 June 2008

		Period to 30 June 2008
		£'000

Equity shareholders' funds at 17 January 2007 (date of incorporation)		-
Return on ordinary activities after taxation		1,732
Increase in share capital in issue attributable to rollover from New City High Yield Trust plc		52,964
Increase in share capital in issue attributable to placings and offer for subscription		21,481
Launch costs		(596)
Cost of reduction in stated capital account		(12)
Dividends paid		(4,445)
Equity shareholders' funds at 30 June 2008		71,124

Audited Cash Flow Statement

Period from 17 January 2007 (date of incorporation) to 30 June 2008

	Period to 30 June 2008
	£'000

Operating activities
Investment income received	8,405
Deposit interest received	127
Investment management fees paid	(830)
Other cash payments	(401)
Net cash inflow from operating activities	7,301

Servicing of finance
Interest on loan	(1,180)
Net cash outflow from servicing of finance	(1,180)

Taxation
Irrecoverable withholding tax paid	(152)

Capital expenditure and financial investment
Purchases of investments	(57,322)
Disposals of investment	34,649
Net cash outflow from capital expenditure and financial investment	(22,673)

Dividends
Equity dividends paid	(4,445)
Net cash outflow before financing	(21,149)

Financing
Issue of ordinary shares	21,599
Expenses of share issues and launch costs	(714)
Cost of reduction in stated capital account	(12)
Bank loan drawn down	2,000
Net cash inflow from financing	22,873
Increase in cash	1,724

Reconciliation of net cash flow to movement in net debt
Increase in cash in the period	1,724
Cash inflow from transfer of cash from New City High Yield Trust plc†	532
Exchange losses	(153)
Transfer of loan from New City High Yield Trust plc†	(14,000)
Cash inflow from bank loan drawn down	(2,000)
Movement in net debt in the period	(13,897)

Opening net debt at 17 January 2007	-
Closing net debt at 30 June 2008	(13,897)

† On 6 March 2007 the net assets of New City High Yield Trust plc which totalled £52,964,000 were transferred in specie to New City High Yield Fund Limited. Cash of £532,000 and investments with a market value of £66,432,000 (including accrued interest) were received and a loan of £14 million due to Allied Irish Bank was also novated and transferred to the Company.

Notes

1. Return per ordinary share

Revenue Return - The revenue return per ordinary share is based on the net revenue return on ordinary activities after taxation of £7,327,000 and on a weighted average of 130,471,218 ordinary shares in issue throughout the period.

Capital Return - The capital return per ordinary share is based on the net capital return on ordinary activities after taxation of £(5,595,000) and on a weighted average of 130,471,218 ordinary shares in issue throughout the period.

2. A fifth interim dividend of 1.02p per share was paid on 29 August 2008. In accordance with UK GAAP this
dividend has not been included as a liability in these accounts.

3.         On 6 March 2007 99,022,414 ordinary shares were issued pursuant to the scheme for the voluntary winding up
            of New City High Yield Trust plc and rollover of its shareholders interests into the Company. A further
            27,674,414 ordinary shares were issued pursuant to a placing and offer for subscription which raised
            £15m.  Dealings in these shares commenced on 7 March 2007. A further 3,500,000 ordinary shares were
            issued pursuant to a placing on 18 December 2007 and raised £1.8 million. A further 9,169,600 ordinary
            shares were issued pursuant to a placing on 28 February 2008 and raised £4.7 million.

The basic net asset value per ordinary share of 51.03p is based on net assets of £71,124,000
and 139,366,428 shares, being the total number of ordinary shares in issue at the end of the period.

4. Post balance sheet event

Subsequent to the period end, on 18 July 2008, one of the Company's listed investments (FibreGen 8% CV 30/06/10) was suspended. At 30 June 2008 this investment was valued at £2,688,000 based on its closing bid price; however, the Board has now valued it at £480,000. This is equivalent to a write down of 1.58p per share.

5. The financial information set out above does not constitute the Company’s statutory accounts for the period ended 30 June 2008. The statutory accounts for 2008 are audited and the Auditors have issued an unqualified opinion. The statutory accounts for 2008 will be finalised on the basis of the financial information presented in this announcement and will be delivered to the Registrar of Companies following the Company’s Annual General Meeting.

6. The report and accounts for the period ended 30 June 2008 will be posted to shareholders and made available
on the website www.ncim.co.uk. Copies may also be obtained from the Company's registered office,
Ordnance House, 31 Pier Road, St. Helier, Jersey, JE4 8PW, Channel Islands

Principal Risks

The Company's assets consist principally of listed fixed interest securities and equities and its principal risks are therefore market related. The Company is also exposed to currency risk in respect of the markets in which it invests. These risks, which have not changed materially since launch in March 2007, and the way in which they are managed, are described in more detail in the report and accounts for the period ended 30 June 2008. The report will be available on the manager's website www.ncim.co.uk during October 2008.

Statement of Directors' Responsibilities in Respect of the Annual Financial Report

In accordance with Chapter 4 of the Disclose and Transparency Rules, we confirm that to the best of our knowledge, in respect of the report and accounts for the period ended 30 June 2008, of which this statement of results is an extract:

The financial statements have been prepared in accordance with applicable UK Accounting Standards, on a going concern basis, and give a true and fair view of the assets, liabilities, financial position and return of the Company;
The Report of the Directors includes a fair review of the development and performance of the business and the position of the Company together with a description of principal risks and uncertainties for the forthcoming financial year.
The Report and accounts include details on related party transactions.