Half-yearly Report
City Merchants High Yield Trust Limited
Half-Yearly Financial Report for the Six Months to 30 June 2014
KEY FACTS
City Merchants High Yield Trust Limited is a Jersey incorporated investment
company listed on the London Stock Exchange. The Company commenced trading on 2
April 2012 as a successor company to City Merchants High Yield Trust plc.
Objective of the Company
The Company's investment objective is to seek to obtain both high income and
capital growth from investment, predominantly in high-yielding fixed-interest
securities.
The Company seeks to provide a high level of dividend income relative to
prevailing interest rates through investment in fixed-interest securities,
various equity-like securities within fixed-income markets and equity-linked
securities such as convertible bonds and in direct equities that have a high
income yield. It also seeks to enhance total returns through capital
appreciation generated by investments which have equity-related
characteristics.
Performance Statistics
FOR SIX MONTHS TO FOR YEAR TO
30 JUN 2014 31 DEC 2013
Net Asset Value
 Total return +4.4% +13.3%
 Capital return +1.7% +7.5%
Movement in share price* +3.5% +11.9%
Dividend for the period 5p 10p
Period End Information
At 30 JUN 2014 At 31 DEC 2013
Net asset value per share 187.28p 184.12p
Share price* 190.50p 184.00p
(Premium)/discount per share (1.7%) 0.1%
Gearing
 Gross gearing nil nil
 Net cash 6.0% 5.5%
* Source: Thomson Reuters Datastream
.
INTERIM MANAGEMENT REPORT INCORPORATING THE CHAIRMAN'S STATEMENT
Chairman's Statement
I am pleased to report that the Company has continued to operate satisfactorily
through the first half of 2014.
In the six months to 30 June 2014, the total return net asset value was +4.4%
which compares favourably with the average return of 4.1% from the funds in the
Investment Management Association Sterling Strategic Bond sector.
The Manager's Investment Report, which follows, provides some background on how
this was achieved and how the portfolio is positioned.
I commented in the last annual report that subsequent to the year end the
Company's shares had begun to trade at a premium to net asset value (NAV). I am
pleased to report that this has continued, indicating heightened demand for the
Company's shares. Consequently the Company was able to issue 5,075,000 shares
in the six months to 30 June 2014, at an average price of 187.87p, and a
further 850,000 shares have been issued prior to the date of this report.
Altogether, this represents approximately £11.1 million of capital raised so
far this year. These shares were issued at a premium to NAV, which has enhanced
net assets by approximately £85,000, in aggregate net of costs.
The Company continues to produce an attractive level of income for shareholders
and the first and second interim dividends for this year, each of 2.5p, are in
line with our target of matching last year's total dividends.
The Board believes the portfolio remains well positioned to continue to provide
an attractive level of income for shareholders with some limited potential for
capital appreciation.
In order to comply with the Alternative Investment Fund Managers Directive
(AIFMD) it has been necessary for the Company to make some new administrative
arrangements:
Your Board has appointed Invesco Fund Managers Limited (IFML) as the Company's
Alternative Investment Fund Manager (AIFM), by way of a new investment
management agreement between the Company and IFML that became effective on 22
July 2014. IFML is an affiliate of the Company's previous investment manager,
Invesco Asset Management Limited (IAML) and has been authorised as an AIFM by
the UK's Financial Conduct Authority. The previous investment management
agreement between the Company and IAML has been terminated, although IAML
continues to manage the Company's investment portfolio under delegated
authority from IFML. The management fee and notice period remain unchanged.
The Company has also appointed BNY Mellon Trust & Depositary (UK) Limited to
act as the Company's depositary under the terms of a depositary agreement also
dated 22 July 2014 and entered into between the Company, the AIFM and the
Depositary. The Depositary has delegated safe keeping of the Company's
investments to the Company's previous custodian, The Bank of New York Mellon
(London Branch). It is not expected or intended that these new arrangements
will result in any change to the way the Company's assets are invested.
Clive Nicholson
Chairman
19 August 2014
.
Manager's Investment Report
Market Background
The high yield bond market achieved positive returns in the first half of the
year. With inflation data lower than expected in the major developed markets,
falling core government yields supported the wider market. Demand for
income-bearing assets was strong. This helped high yield bonds to outperform
both core government bonds and investment grade corporate bonds.
Coming into 2014, it was a widely held view that government yields in the major
developed markets would be pushed higher by improving economic growth and
anticipation of monetary tightening. This has not happened. Instead, bond
yields have fallen. US growth in the first quarter was negative, which
surprised the market but was largely ascribed to the impact of severe winter
weather, an effect that is expected to unwind quickly. Growth in the UK has not
disappointed, with business sentiment, employment and retail sales data
suggesting the recovery is continuing to strengthen. The eurozone economy,
particularly in the earlier part of the period, also showed encouraging signs
of growth. But the weakness of inflation has been a surprise. Headline CPI
readings well below 2% have been recorded in the US and the UK, while in the
eurozone the rate fell from 0.8% in January to just 0.5% in June.
Combined with signs later in the reporting period that the eurozone recovery
could weaken again, this low level of inflation was enough to prompt the
European Central Bank to cut interest rates in June. The bank also announced a
number of measures aimed at stimulating lending to the business and consumer
sectors and made clear its preparedness to initiate a programme of outright
asset purchases. Conversely, the strength of economic data in the UK and the US
has led to increased anticipation of interest rate hikes in these economies.
This bifurcation of monetary policy expectations across the major central banks
has been an important influence on yields in recent weeks, with Bunds and other
euro-denominated bonds extending their year-to-date rally while the yields of
sterling and dollar-denominated bonds have risen.
According to data from Merrill Lynch, the total return for European high yield
bonds in the first half of 2014 was 2.2% (in sterling terms). This return was
depressed by the appreciation in the value of the pound against the euro over
the period. In local currency terms, the return was 5.5%. The aggregate yield
for the sector fell 64bps to 4.43%. By comparison, sterling investment grade
bonds returned 5.0% and Gilts returned 3.5%. Compared to preceding periods,
there was little variance in returns across the sectors of the corporate bond
market, with financials and non-financials roughly in line.
High yield bond issuance has been strong throughout this period, as corporates
have taken the opportunity offered by current market conditions to raise
capital on relatively attractive terms. Barclays estimates there was £56.6
billion of European high yield supply in the first half of 2014, across all
currencies. This is 48% higher than in the same period in 2013. Supply was
boosted by the largest high yield offering ever, when Numericable and Altice
together issued $10.7 billion to fund a leveraged buyout. Wind, the Italian
telecom, raised a total of €1.75 billion across euro and dollar bonds. The
order book for this deal was reported to be €10 billion.
Defaults remain low. According to Moody's, the trailing 12 month global high
yield default rate was 2.3% in May 2014, down from 2.5% in April 2014 and 2.8%
in May 2013.
Portfolio Strategy
The net asset value of the Company ended June 2014 at 187.28p, up from 184.12p
at the close of 2013, an increase of 1.7%. The Company paid a total dividend of
5p over the period, giving rise to a total return net asset value of 4.4%.
The portfolio holds a core of high yield corporate bonds, focused on seasoned
issuers that we consider to be default-remote. In addition, we have significant
exposure to areas of the market which we believe still offer relatively
attractive yield. Approximately one quarter of the portfolio is invested in
bank capital, predominantly in the subordinated debt of large European banks.
The valuations of these instruments have risen strongly but we think that this
reflects the increased creditworthiness of a sector whose fundamentals have
continued to improve. We also have holdings in hybrid capital instruments,
across sectors including telecoms and utilities. We believe the subordination
risk of these more junior debt instruments is attractive in the context of the
companies' relatively strong balance sheets. We continue to seek opportunities
to add yield to the portfolio where we consider that the balance of reward to
risk is attractive.
Outlook
The high yield bond market has continued to deliver strong positive returns in
recent quarters, but we have not seen the level of spread tightening that
occurred in 2012 and 2013. In our opinion, the market is now fully valued and
we see little potential for further capital appreciation. Yields and spreads
are low by historical standards. We are seeking to provide an attractive level
of income while focusing our portfolio on issuers with low default risk and on
bonds where we think the balance of reward to risk remains relatively good.
Invesco Asset Management Limited
Manager
Paul Read Paul Causer Rhys Davies
Portfolio Managers Deputy Portfolio Manager
19 August 2014
.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risk factors relating to the Company can be summarised as
follows:
- Investment Objective - the success of the Company depends on the Portfolio
Managers' ability to achieve the Company's investment objective. There is no
guarantee that the Company's investment objective will be achieved or will
provide the returns sought by the Company.
- Investment Risk - global markets have been experiencing volatility,
disruption and instability. Material changes affecting global capital markets
may have a negative effect on the Company's business, financial condition and
results of operations. The poor performance of any individual portfolio
investment has a negative effect on the value of the portfolio and consequently
the Net Asset Value (NAV) per share. A majority of the portfolio comprises
high-yield fixed-interest securities - these are subject to credit, interest
rate, liquidity and duration risks, and a significant proportion of these are
non-investment grade securities.
- Foreign Exchange Risk - the movement of exchange rates may have unfavourable
or favourable impact on returns as the majority of the assets are non-sterling.
- Dividends - the ability of the Company to pay dividends quarterly is
dependent on the level and timing of receipt of income on its investments.
- Ordinary Shares - the shares may trade at a discount to NAV and shareholders
may be unable to realise their investments through the secondary market at NAV.
The existence of a liquid market in the shares cannot be guaranteed.
- Gearing of Returns through Borrowings - performance maybe geared by means of
a bank credit facility. Whilst gearing will be used with the aim of enhancing
returns on the portfolio when the value of the Company's assets is rising, it
will have the opposite effect when the value is falling. There is no guarantee
that any credit facility would be renewable at maturity on terms acceptable to
the Company.
- Resources: Reliance on Third Party Providers - failure by any service
provider to carry out its obligations in accordance with the terms of its
appointment could have a materially detrimental impact on the effective
operation of the Company and on the ability of the Company to pursue its
investment policy successfully.
- Regulatory and Tax Related - whilst compliance with rules and regulations is
closely monitored, breaches could affect returns to shareholders. Changes to
regulation or to the Company's tax status or tax treatment might adversely
affect the Company.
- Derivatives - the Company may enter into derivative transactions for
efficient portfolio management. Derivative instruments can be highly volatile
and expose investors to a high risk of loss.
In the view of the Board, these principal risks and uncertainties are as
applicable to the remaining six months of the financial year as they were to
the period under review.
RELATED PARTIES AND TRANSACTIONS WITH THE MANAGER
Note 20 of the 2013 annual financial report gives details of related party
transactions and transactions with the Manager. The basis of these has not
changed for the six months being reported. The 2013 annual financial report is
available on the Manager's website at www.invescoperpetual.co.uk/
investmenttrusts.
GOING CONCERN
The financial statements are prepared on a going concern basis. The Directors
consider that going concern is the appropriate basis as they have a reasonable
expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future. In reaching this conclusion, the
Directors have taken into account the Company's investment objective, its risk
management policies, the diversified nature of its investment portfolio, the
borrowing facility which can be used to meet short-term funding requirements,
the liquidity of most of its investments which could be used to repay any
borrowings in the event that the facility could not be renewed or replaced and
the ability of the Company to meet all of its liabilities and ongoing expenses.
BOND RATING ANALYSIS (STANDARD AND POOR'S RATINGS)
The definitions of these ratings are set out on page 63 of the 2013 annual
financial report.
30 JUN 2014 31 DEC 2013
Rating % OF CUMULATIVE % OF CUMULATIVE
PORTFOLIO TOTAL % PORTFOLIO TOTAL %
Investment Grade:
AA+ 0.4 0.4 - -
A- 3.9 4.3 1.2 1.2
BBB+ 6.2 10.5 4.6 5.8
BBB 6.8 17.3 7.0 12.8
BBB- 10.8 28.1 10.0 22.8
Non-investment Grade:
BB+ 9.3 37.4 12.2 35.0
BB 9.3 46.7 8.5 43.5
BB- 11.7 58.4 6.0 49.5
B+ 8.2 66.6 9.8 59.3
B 8.3 74.9 11.6 70.9
B- 2.7 77.6 2.6 73.5
CCC+ 2.0 79.6 1.9 75.4
CCC 0.1 79.7 0.3 75.7
NR (including equity) 20.3 100.0 24.3 100.0
100.0 100.0
THIRTY LARGEST INVESTMENTS AT 30 JUNE 2014
MOODY MARKET
/S&P COUNTRY OF VALUE % OF
ISSUER/ISSUE RATING INDUSTRY INCORPORATION £'000 PORTFOLIO
Lloyds Banking Financials UK
Group - Lloyds
Bank & LBG
Capital
7.875% Var NR/BB- 4,258
Perpetual
7% Var Perpetual NR/BB- 2,126
6.385% 12 May Baa3/BBB- 1,309
2020
7,693 5.79
Aviva & General Financials UK
Accident
6.125% Perpetual Baa1/BBB 3,887
8.875% NR/NR 1,541
Preference
5,428 4.09
Société Genérale Financials France
8.875% FRN Ba2/BBB- 4,641
Perpetual
8.25% Perpetual Ba3/BB+ 229
7.875% FRN Ba3/BB+ 177
Perpetual
5,047 3.79
General Motors Consumer Goods USA
Wts 10 Jul 2019 Equity 4,448
Wts 10 Jul 2016 Equity 495
4,943 3.71
Premier Farnell Industrials UK
89.2p NR/NR 4,142 3.11
Convertible
  Preference
Credit Agricole Financials France
7.589% FRN Ba2/BBB- 2,394
Perpetual
7.5% Var NR/NR 958
Perpetual
8.125% FRN Ba2/BBB- 574
Perpetual
3,926 2.94
Telefonica Telecommunications Netherlands
Europe
6.75% Perpetual Ba1/BB+ 2,226
5.875% Perpetual Ba1/BB+ 1,201
3,427 2.57
Standard Financials UK
Chartered
5.125% 06 Jun A3/A- 1,848
2034
5.7% 26 Mar 2044 A3/A- 1,211
9.5% FRN A3/A- 302
Perpetual
3,361 2.52
Intesa Sanpaolo Financials Italy
8.375% FRN Ba3/BB 3,108 2.33
Perpetual
Enterprise Inns Consumer Goods UK
6.5% 06 Dec 2018 NR/BB- 2,705 2.03
(SNR)
Electricite De Utilities France
France
6% Perpetual A3/BBB+ 1,382
5.875% Perpetual A3/BBB+ 1,039
2,421 1.82
UPC Consumer Services Germany
9.625% 01 Dec B3/B 1,719
2019
5.625% 15 Apr Ba3/BB- 699
2023
2,418 1.82
ENEL Utilities Italy
7.75% 10 Sep Ba1/BB+ 1,589
2075
6.625% 15 Sep Ba1/BB+ 796
2076
2,385 1.79
Barclays Financials UK
9.25% Perpetual Ba1/BBB- 1,193
6.625% 30 Mar Baa3/BBB 997
2022
2,190 1.64
Balfour Beatty Industrials UK
10.75p NR/NR 2,176 1.63
Convertible
Preference
Citigroup Financials USA
6.829% FRN 28 Ba1/BB+ 2,135 1.60
Jun 2067
Koninklijke KPN Telecommunications Netherlands
6.875% FRN 14 Ba2/BB 2,111 1.59
Mar 2073
REA Finance Consumer Goods Netherlands
9.5% 31 Dec NR/NR 2,090 1.57
2017
Gala Finance Consumer Services UK 1,917 1.44
8.875% 01 Sep B2/B+
2018
Virgin Media Consumer Services UK
Finance
8.875% 15 Oct B2/B 708
2019
6% 15 Apr 2021 Ba3/BB- 682
6.25% 28 Mar Ba3/BB- 510
2029
1,900 1.43
Catlin Financials USA
Insurance
7.249% FRN NR/BBB+ 1,897 1.42
Perpetual
Santos Finance Oil and Gas Australia
8.25% FRN 22 NR/BBB 1,838 1.38
Sep 2070
Obrascon Huarte Industrials Spain
Lain
8.75% 15 Mar Ba3/NR 1,740 1.31
2018
Origin Energy Oil and Gas Australia
7.875% 16 Jun Ba1/BB+ 1,728 1.30
2071
BPCE Financials France
9% FRN Ba2/BBB- 1,666 1.25
Perpetual
AXA Financials France
5.25% FRN 16 A3/BBB 900
Apr 2040
6.379% FRN Baa1/ 634
Perpetual BBB-
1,534 1.15
UniCredit Financials Luxembourg
International
Bank
8.125% FRN B1/BB 952
Perpetual
8.5925% FRN B1/BB 548
Perpetual
1,500 1.13
Standard Life Financials UK
6.75% Perpetual A3/A- 1,122
5.5% 04 Dec Baa2/BBB 368
2042
1,490 1.12
Commerzbank Financials Germany
7.75% 16 Mar Ba2/BB+ 993
2021
8.125% 19 Sep Ba2/BB+ 428
2023
1,421 1.07
Iron Mountain Support Services USA
6.75% 15 Oct B1/B 1,415 1.06
2018
81,752 61.40
Other 51,387 38.60
investments
Total 133,139 100.00
investments
.
CONDENSED STATEMENT OF CHANGES IN EQUITY
STATED CAPITAL REVENUE
CAPITAL RESERVE RESERVE TOTAL
£'000 £'000 £'000 £'000
FOR THE SIX MONTHS ENDED 30 JUNE 2014
At 31 December 2013 113,410 18,368 2,239 134,017
Net proceeds from issue of shares 9,479 - - 9,479
Total comprehensive income for the period - 2,541 3,512 6,053
Dividends paid - note 4 (98) - (3,634) (3,732)
At 30 June 2014 122,791 20,909 2,117 145,817
FOR THE SIX MONTHS ENDED 30 JUNE 2013
At 31 December 2012 113,410 9,336 1,929 124,675
Total comprehensive income for the period - 2,970 3,807 6,777
Dividends paid - note 4 - - (3,640) (3,640)
At 30 June 2013 113,410 12,306 2,096 127,812
FOR THE YEAR ENDED 31 DECEMBER 2013
At 31 December 2012 113,410 9,336 1,929 124,675
Total comprehensive income for the year - 9,032 7,589 16,621
Dividends paid - note 4 - - (7,279) (7,279)
At 31 December 2013 113,410 18,368 2,239 134,017
.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
FOR THE
FOR THE SIX MONTHS TO FOR THE SIX MONTHS TO YEAR ENDED
30 JUN 2014 30 JUN 2013 31 DEC 2013
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL TOTAL
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Profit on - 1,153 1,153 - 5,034 5,034 10,272
investments held
at fair value
Exchange - (241) (241) - (51) (51) (500)
differences
Profit/(loss) on - 1,822 1,822 - (1,835) (1,835) (384)
derivative
financial
instruments -
currency hedges
Income
UK dividends 184 - 184 301 - 301 720
UK investment 1,421 - 1,421 1,508 - 1,508 2,987
income -
interest
Overseas 2,512 - 2,512 2,525 - 2,525 4,966
investment
income -
interest
Overseas 8 - 8 4 - 4 11
dividends
Deposit interest 1 - 1 1 - 1 2
4,126 2,734 6,860 4,339 3,148 7,487 18,074
Investment (346) (186) (532) (312) (168) (480) (972)
management fee -
note 2
Other expenses (188) - (188) (172) (1) (173) (362)
Profit before 3,592 2,548 6,140 3,855 2,979 6,834 16,740
finance costs
and taxation
Finance costs (12) (7) (19) (16) (9) (25) (44)
Profit before 3,580 2,541 6,121 3,839 2,970 6,809 16,696
tax
Taxation (68) - (68) (32) - (32) (75)
Profit after tax 3,512 2,541 6,053 3,807 2,970 6,777 16,621
Return per 4.7p 3.4p 8.1p 5.2p 4.1p 9.3p 22.8p
ordinary share -
note 5
The total column of this statement represents the Company's statement of
comprehensive income, prepared in accordance with International Financial
Reporting Standards. The profit after tax is the total comprehensive income.
The supplementary revenue and capital columns are presented for information in
accordance with the Statement of Recommended Practice issued by the Association
of Investment Companies. All items in the above statement derive from
continuing operations and the Company has no other gains or losses. No
operations were acquired or discontinued in the period.
.
CONDENSED BALANCE SHEET
Registered in Jersey No. 109714
AT AT AT
30 JUN 2014 30 JUN 2013 31 DEC 2013
£'000 £'000 £'000
Non-current assets
  Investments held at fair value 133,139 121,685 123,775
through profit or loss
Current assets
  Other receivables - accrued income 2,580 2,292 2,502
  Amounts due from brokers 786 - 526
  Derivative financial instruments
  - unrealised gain on forward 899 - 216
currency contracts
  Cash and cash equivalents 8,790 4,625 7,365
13,055 6,917 10,609
Total assets 146,194 128,602 134,384
Current liabilities
  Other payables (377) (329) (367)
  Amount due to brokers - (300) -
  Derivative financial instruments
  - unrealised loss on forward - (161) -
currency contract
(377) (790) (367)
Net assets 145,817 127,812 134,017
Capital and reserves
  Stated capital - note 7 122,791 113,410 113,410
  Capital reserve 20,909 12,306 18,368
  Revenue reserve 2,117 2,096 2,239
Shareholders' funds 145,817 127,812 134,017
Net asset value per ordinary share - 187.28p 175.60p 184.12p
note 6
.
CONDENSED STATEMENT OF CASH FLOW
SIX MONTHS TO SIX MONTHS TO YEAR TO
30 JUN 2014 30 JUN 2013 31 DEC 2013
£'000 £'000 £'000
Cash flow from operating
activities
Profit before tax 6,121 6,809 16,696
Taxation (68) (32) (75)
Adjustment for:
  Purchases of investments (42,388) (21,302) (30,182)
  Sales of investments 33,918 22,478 33,680
(8,470) 1,176 3,498
Profit on investments (1,153) (5,034) (10,272)
Exchange differences 241 51 500
(Profit)/loss on derivative (683) 151 (226)
financial instruments - currency
hedges
Finance costs 19 25 44
Operating cash flows before (3,993) 3,146 10,165
movements in working capital
(Increase)/decrease in receivables (78) 115 (95)
Increase/(decrease) in payables 10 (14) 24
Net cash flows from operating (4,061) 3,247 10,094
activities before and after tax
Cash flow from financing
activities
Finance costs paid (20) (25) (44)
Net proceeds from issue of shares 9,479 - -
Equity dividends paid - note 4 (3,732) (3,640) (7,279)
Net cash flows from financing 5,727 (3,665) (7,323)
activities
Net increase/(decrease) in cash 1,666 (418) 2,771
and cash equivalents
Exchange differences (241) (51) (500)
Cash and cash equivalents at the 7,365 5,094 5,094
beginning of the period
Cash and cash equivalents at the 8,790 4,625 7,365
end of the period
.
NOTES TO THE INTERIM FINANCIAL RESULTS
1. Basis of Preparation
The condensed financial statements have been prepared using the same accounting
policies as those adopted in the 2013 annual financial report. They have been
prepared on an historical cost basis, except for the measurements at fair value
of investments and derivatives, and in accordance with the applicable
International Financial Reporting Standards (IFRS) and interpretations issued
by the International Financial Reporting Interpretations Committee as adopted
by the European Union.
Where presentational guidance set out in the Statement of Recommended Practice
(SORP): Financial Statements of Investment Trust Companies and Venture Capital
Trusts' is consistent with the requirements of IFRS, the Directors have sought
to prepare the financial statements on a basis compliant with the
recommendations of the SORP.
2. Management Fee
Investment management fees and finance costs are allocated 35% to capital and
65% to revenue. The management fee is payable quarterly in arrear and is equal
to 0.1875% of the value of the Company's total assets under management less
current liabilities at the end of each relevant quarter, plus a fixed amount of
£24,000 per annum.
3. Taxation
The Company is subject to Jersey income tax at the rate of 0% (2013: 0%). The
overseas tax charge consists of irrecoverable withholding tax.
4. Dividends Paid
SIX MONTHS TO SIX MONTHS TO YEAR TO
30 JUN 2014 30 JUN 2013 31 DEC 2013
PENCE £'000 PENCE £'000 PENCE £'000
Interim in respect of 2.5 1,828 2.5 1,820 2.5 1,820
previous period
First interim 2.5 1,904 2.5 1,820 2.5 1,820
Second interim - - - - 2.5 1,819
Third interim - - - - 2.5 1,820
5.0 3,732 5.0 3,640 10.0 7,279
0.125p of the dividends for the period have been paid from stated capital,
representing accrued income attributable to the new shares at the time of issue
(see note 7).
A second interim dividend of 2.5p (2013: 2.5p) has been declared and will be
paid 23 August 2014 to ordinary shareholders on the register on 25 July 2014.
5. Basis of Returns
SIX MONTHS TO SIX MONTHS TO YEAR TO
30 JUN 2014 30 JUN 2013 31 DEC 2013
Profit after tax:
Revenue £3,512,000 £3,807,000 £7,589,000
Capital £2,541,000 £2,970,000 £9,032,000
Total £6,053,000 £6,777,000 £16,621,000
Weighted average number of shares in 75,185,220 72,786,327 72,786,327
issue during the period
6. Basis of Net Asset Value per Ordinary Share
AT AT AT
30 JUN 2014 30 JUN 2013 31 DEC 2013
Shareholders' funds £145,817,000 £127,812,000 134,017,000
Number of shares in issue at the period 77,861,327 72,786,327 72,786,327
end
7. Stated Capital, including Movements
SIX MONTHS TO SIX MONTHS TO YEAR TO
30 JUN 2014 30 JUN 2013 31 DEC 2013
Stated capital:
  Brought forward £113,410,000 £113,410,000 113,410,000
  Net issue proceeds £9,479,000 - -
Dividend Paid from stated capital (98,000) - -
  Carried forward £122,791,000 £113,410,000 113,410,000
Number of ordinary shares:
  Brought forward 72,786,327 72,786,327 72,786,327
  Issued in period 5,075,000 - -
  Carried forward 77,861,327 72,786,327 72,786,327
Per share:
- average issue price 187.87p - -
- average net proceeds 186.78p - -
Of the net issue proceeds of £9,479,000, an aggregate amount of £98,000
represented the accrued income element of the net asset value attributed to the
new shares.
Subsequent to the period end 850,000 shares have been issued at an
average price of 189.17p.
8. Status of Half-yearly Financial Report
The financial information contained in this half-yearly report, which has not
been reviewed or audited, does not constitute statutory accounts as defined in
Article 104 of Companies (Jersey) Law 1991. The financial information for the
half year ended 30 June 2013 and the half year ended 30 June 2014 have not been
audited. The figures and financial information for the year ended 31 December
2013 are extracted and abridged from the latest published accounts and do not
constitute the statutory accounts for that year.
By order of the Board
R&H Fund Services (Jersey) Limited
Company Secretary
19 August 2014
.
DIRECTORS' RESPONSIBILITY STATEMENT
in respect of the preparation of the half-yearly financial report.
The Directors are responsible for preparing the financial report, using
accounting policies consistent with applicable law and International Financial
Reporting Standards.
The Directors confirm that to the best of their knowledge:
- the condensed set of financial statements contained within the half-yearly
financial report have been prepared in accordance with International Accounting
Standards 34 `Interim Financial Reporting';
- the interim management report includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R of the FCA's Disclosure and Transparency
Rules; and
- the interim management report includes a fair review of the information
required on related party transactions.
The half-yearly financial report has not been audited or reviewed by the
Company's auditor.
Signed on behalf of the Board of Directors.
Clive Nicholson
Chairman
19 August 2014
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