Interim Results

City Natural Res High Yield Tst PLC 26 February 2007 To: RNS From: City Natural Resources High Yield Trust plc Date: 26 February 2007 Unaudited results for the six months ended 31 December 2006 • Net asset value total return of 59.9 per cent in 2006 the highest return of any conventional investment trust • Net asset value total return of 29.3 per cent since 1 July 2006 compared to a total return of 3.6 per cent from the benchmark index • Ordinary share price total return since 1 July 2006 of 27.0 per cent • Net asset value total return of 218.4 per cent since 1 August 2003 compared to a total return of 105.9 per cent from the benchmark index • Ordinary Share price total return since 1 August 2003 of 187.4 per cent • Discount of 7.8 per cent The Chairman, Geoff Burns, said: 'I am delighted to report on another six months of exceptional performance by the Company. The bald figures that follow do not do justice to the excitement that has accompanied its progress. Investment Performance The six months to 31 December 2006 saw total returns in the Company's net asset value and share price of 29.3 per cent and 27.0 per cent respectively. Its net asset value total return of 59.9 per cent in 2006 was the best of all conventional investment trusts, and its share price total return of 57.7 per cent second best. Since the reconstruction of the investment portfolio was completed following the change to the Company's investment objective on 1 August 2003 the net asset value total return has been 218.4 per cent. This compares with a 105.9 per cent increase in the benchmark index. Investment Strategy Six months ago I said that: 'As the bull market in the natural resource sector has continued, so has the Manager's strategy of taking full advantage of the capital growth opportunities available.' While this remains the case, dividends have been maintained and we will not lose sight of the importance of income to shareholders. Board I would like to welcome Richard Prickett, who joined the Board on 1 December. Richard has substantial corporate experience in the mineral sector, having been Chairman of Brancote Holdings until its merger with Meridian Gold in 2002. He is currently a Director of two AiM listed mineral exploitation companies, Patagonia Gold and Landore Resources, and his input to the Board's debates will be invaluable. Outlook 2006 ended as it began, with a flourish. Good news from the East combined with above expectation growth numbers in the West to underpin base metal prices, while equities made good progress. If copper, as we anticipated, disappointed, uranium went from strength to strength, hitting a new high of US$ 85 per pound. Extract Resources, SXR Uranium One, Simmer and Jack, Kalahari and the Manager's own specialist uranium fund Geiger Counter all performed strongly. Sometimes it is hard not to become anxious about the high levels of metals markets, but the shortage of near term supply should ensure that that the trend remains intact - at least for the time being. We remain cautiously optimistic as to the year ahead.' 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 718 1000 Unaudited Income Statement for the six months ended 31 December 2006 2006 2006 2006 Revenue Capital Total £'000 £'000 £'000 Realised gains on investments - 1,744 1,744 Increase in fair value of investments - 20,964 20,964 Exchange gains - 4 4 Income 1,627 - 1,627 Investment management fee (144) (431) (575) Other expenses (162) - (162) Net revenue before finance costs and taxation 1,321 22,281 23,602 Interest payable (145) (435) (580) Net revenue on ordinary activities before taxation 1,176 21,846 23,022 Tax on ordinary activities (321) 270 (51) Net revenue on ordinary activities after taxation 855 22,116 22,971 Earnings per share (pence) 1.36 35.19 36.55 Amounts recognised as dividends in the period Six months Six months ended ended 31 December 31 December 2006 2005 (unaudtied) (unaudited) £'000 £'000 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 Fourth interim dividend for the year ended 30 June 2006 of 0.65p per share 409 - First interim dividend for the year ended 30 June 2007 of 0.5p per share 314 - 723 628 Unaudited Income Statement 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 revenue before finance costs and taxation 1,256 9,672 10,928 Interest Payable (115) (272) (387) Net revenue on ordinary activities before taxation 1,141 9,400 10,541 Tax on ordinary activities (283) 173 (110) Net revenue on ordinary activities after taxation 858 9,573 10,431 Earnings per share (pence) 1.36 15.23 16.59 Audited Income Statement for the year ended 30 June 2006 2006 2006 2006 Revenue Capital Total £'000 £'000 £'000 Realised losses on investments - 12,161 12,161 Increase in fair value of investments held - 12,986 12,986 Exchange losses - (128) (128) Income 2,877 - 2,877 Investment management fee (217) (654) (871) Other expenses (270) - (270) Net revenue before finance costs and taxation 2,390 24,365 26,755 Interest Payable (236) (603) (839) Net revenue on ordinary activities before taxation 2,154 23,762 25,916 Tax on ordinary activities (599) 390 (209) Net revenue on ordinary activities after taxation 1,555 24,152 25,707 Earnings per share (pence) 2.48 38.42 40.90 Balance Sheet 31 December 31 December 30 June 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Fixed assets Investments 117,698 74,645 92,556 Current assets Debtors 1,236 862 1,076 Cash at bank and on deposit 1,155 440 508 2,391 1,302 1,584 Creditors: amounts falling due within one year (22,546) (15,316) (18,862) Net current liabilities (20,155) (14,014) (17,278) Net Assets 97,543 60,631 75,278 Capital and reserves Called-up share capital 15,719 15,714 15,714 Special distribution reserve 30,386 30,386 30,386 Share premium 23 - - Warrant reserve 2,342 2,353 2,353 Other reserves: Capital reserve - realised 10,636 (2,846) 6,482 Capital reserve - unrealised 37,323 14,119 19,371 Revenue reserve 1,114 905 972 Equity shareholders' funds 97,543 60,631 75,278 Net asset value per share - basic 155.14p 96.46p 119.76p Net asset value per share - fully diluted 150.96p 95.77p 117.68p Reconciliation of Movements in Shareholders' Funds Six months Six months Year ended ended Ended 31 December 31 December 30 June 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Opening equity shareholders' funds 75,278 50,828 50,828 Shares issued during period 17 - - Return on ordinary activities after taxation 22,971 10,431 25,707 Dividends paid (723) (628) (1257) Closing equity shareholders' funds 97,543 60,631 75,278 Summarised Statement of Cash Flows Six months Six months Year ended 31 ended 31 ended 30 December December June 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net cash inflow from operating activities 448 799 1,609 Net cash outflow from servicing of finance (585) (436) (716) Taxation recovered / (paid) 40 5 (154) Net cash outflow from financial investment (3,037) (2,428) (4,790) Equity dividends paid (723) (628) (1,256) Net cash outflow before financing (3,857) (2,688) (5,307) Net cash inflow from financing 4,500 2,800 5,500 Increase in cash 643 112 193 Reconciliation of net cash flow to movement in net debt Increase / decrease in cash 643 112 193 Cash outflow from drawdown of loans (4,500) (2,800) (5,500) Exchange gains / (losses) 4 (115) (128) Movement in net debt in the period (3,853) (2,803) (5,435) Opening net debt at 1 July (16,992) (11,557) (11,557) Closing net debt at 31 December (20,845) (14,360) (16,992) Represented by: Cash at bank 1,155 440 508 Debt falling due within one year (22,000) (14,800) (17,500) (20,845) (14,360) (16,992) Reconciliation of operating revenue to net cash flow from operating activities Net revenue before interest payable and taxation 23,602 10,928 26,755 (Gains) on investments (22,708) (10,069) (25,147) Increase) in accrued income (268) (7) (91) Increase) in other debtors (24) (66) (91) (Decrease) / increase in other creditors (80) (45) 117 Exchange (gains) / losses (4) 115 128 Overseas witholding tax suffered (70) (57) (62) Net cash inflow from operating activities 448 799 1,609 Notes 1. The unaudited interim results which cover the six months to 31 December 2006 have been prepared in accordance with applicable accounting standards and adopting the accounting policies set out in the statutory accounts of the Company for the year ended 30 June 2006. 2. The Board declared a second interim dividend of 0.5p per share which was paid on 28 February 2007 to shareholders on the register on 2 February 2007, having an ex-dividend date of 31 January 2007. 3. The return per Ordinary share is based on a net revenue on ordinary activities after taxation of £855,000 (2005 - £858,000 and 2006 - £1,555,000) and on a weighted average of 62,857,543 (2005 - 62,857,143 and 2006 - 62,857,143) Ordinary shares in issue throughout the period. The basic capital return per Ordinary Share is based on a net capital gain of £22,116,000 (2005 - £9,573,000 and 2006 - £24,152,000) and on a weighted average of 62,857,543 (2005 - 62,857,143 and 2006 - 62,857,143) Ordinary shares being the weighted average number of Ordinary shares in issue during the period. 4. The basic net asset value per Ordinary share is based on net assets at the end of the period of £97,543,000 (31 December 2005 - £60,631,000, 30 June 2006 - £75,278,000) and on 62,875,653 Ordinary shares (31 December 2005 - 62,857,143, 30 June 2006 - 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 2006 was 155.14p. The fully diluted net asset value per Ordinary share for 31 December 2006 was 150.96p. As at 31 December 2006 there were 3,981,500 (30 June 2006 - 4,000,000) Warrants in issue. Each Warrant confers the right to subscribe for one new ordinary shares at 85 pence on 31 October (or, if later, the date being 30 days after the date in which copies of the Company accounts are dispatched to shareholders) in any of the years 2006 to 2009. The warrant price as at 31 December 2006 was 58.3 pence. 5. On 27 December 2006 the Company issued 18,500 ordinary shares of 25 pence, following the exercise of 18,500 warrants. 6. 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 2006, on which the auditors report was unqualified, have been lodged with the Registrar of Companies. The 2007 interim report, on which the auditors report was unqualified, will be sent to shareholders during March 2007 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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