New City High Yield Fund Ltd : New City High Yield Fund Ltd : Half-yearly report

  New City High Yield Fund Ltd : New City High Yield Fund Ltd : Half-yearly
                                    report

To:    THOMSON REUTERS
Date:28 February 2013
From:New City High Yield Fund Limited
Subject: Interim Report

  Unaudited statement of results for the six months ended 31 December 2012

  *Net asset value total return of +12.4 per cent since 1 July 2012.

  *Ordinary share price total return of +17.2 per cent since 1 July 2012.

  *Dividend yield of 6.1%, based on  dividends at an annualised rate of  4.07 
    pence and a share price of 66.38 pence at 31 December 2012.

  *Ordinary share price at a premium of 9.0 per cent to net asset value at 31
    December 2012.

Chairman's Statement

Investment and Share Price Performance

Your Company enjoyed a good six months to 31 December 2012, as risk assets,
including the high yield bonds that are the Company's core investments,
performed strongly. The net asset value total return for the period was 12.4%,
while the share price total return was better still at 17.2%.

At 31 December 2012 the Company's shares traded at a 9.0% premium to net asset
value and they have continued to trade at a premium since the period end. I
return to this subject below.

Dividends

The Company declared two dividends of 0.90 pence per share in respect of the
period, an increase of 2.3% on those declared in respect of the same period
last year. Based on an annualised rate of 4.07 pence and a share price of
64.63 pence at the time of writing, this represents a yield of 6.3%.

Since your Company relocated to Jersey in March 2007 the level of dividends
paid has increased every year.

Rating and Fund Raising

For a number of years your Company's shares have traded at a premium. This is
testimony both to the strength of the investment proposition offered, and to
the sterling work of the Company's investment manager, Ian Francis, and his
team. On behalf of shareholders, I would like to thank him for his efforts.

The continuing premium rating that the market attaches to the shares of your
Company enabled it once again tocomplete a share issue under its block
listing; £12.5 million was raised from new and existing shareholders in
February 2013. As well as a modest increase in net asset value, continuing
shareholders can expect to benefit from lower total expense ratios and greater
liquidity in the Company's shares.

Outlook

January was very positive, with the FTSE All Share Index up by 6.3%. Your
Company too posted a strong start to the year, delivering a net asset value
total return of 4.1% during January, and, as this strength continued into
February, its net asset value registered an all-time high of 64.3 pence. This
is a very solid capital performance to set alongside a record of dividend
growth.

There are a number of factors to suggest that this strong start may be
sustained rather than fade away as it has done in each of the last four years.
While the Eurozone has avoided meltdown and emerging markets post respectable
growth rates, fears of deflation continue to preoccupy the minds of developed
markets, especially in the United States where the mark made by the Great
Depression has still to fade. There is no sign of the stimulus of Quantitative
Easing being withdrawn, indeed it has spread to Japan, and against this
backdrop a measure of optimism for the balance of 2013 seems justified.

James G West
Chairman
27 February 2013
Investment Manager's Review

The first three months of the new financial year continued to be dominated  by 
the European sovereign  debt crisis,  with Spain  in the  crosshairs, and  the 
smaller banks and the regional governments needing emergency funding to  avoid 
becoming bankrupt. This culminated in one of the most aggressive  statements 
from the European Central Bank (ECB) President, Mario Draghi, saying "within
our mandate, the ECB is willing to do whatever it takes to preserve the Euro,
and, believe me it will be enough ..  " plus "To the extent that the size  of 
these sovereign  premia hamper  the functioning  of the  monetary  policy 
transmissions channel, they come within our mandate ..". At the time it  was 
expected in Europe that Spain would apply for a bail out in double quick time,
which would allow a period of calm to reign in Europe.

The politicians, however, managed to look hard for a banana skin; the  Spanish 
Deputy Prime Minister duly found  it, asking in a  public forum "how much  the 
ECB intended to  spend on  the purchase  of Spanish bonds  if a  bail out  was 
requested?" One  may ask  which  part of  the  "unlimited", stated  by  Mario 
Draghi, did he not  understand? Any figure given  to markets proves a  target 
for speculators to aim at and further destabilise the system. Add to this the
dangerous game of chicken being employed by the Spanish Prime Minister by  not 
requesting a bail out in the hope that the market continues to fund them.

The other  major  feature  of the  first  quarter  was the  third  tranche  of 
Quantitative Easing  (QE3) which  had  a large  positive effect  initially  on 
commodity prices (gold  in particular)  and has had  a longer  term effect  on 
equity and high yield markets.

The second quarter was all about  the USA; firstly the close run  Presidential 
election returning Barack Obama for a  second term obtaining 51% of the  vote, 
3.8% ahead of  his opponent, Mitt  Romney. Once this  was out of  the way  in 
early November it was all  eyes on the "Fiscal Cliff"  and the ability of  the 
political lemmings to avoid the urge to jump over it! We had to put up with a
lot of brinkmanship before  an agreement was made  early on 1^st January.  We 
await with interest the approaching Debt ceiling and the innovative ways  that 
the US uses to either sidestep or re-set the level.

Further on  the  effect of  QE3,  the longer  term  positive effect  has  been 
substantial upside in high  yield markets and  financials in particular,  with 
the iTraxx Europe crossover index tightening  from 660.9bp at the end of  June 
2012 to 482.05bp at the end of December.

The Company announced and  paid its fourth interim  dividend for last year  at 
1.37p, up from  1.32p the  year previous,  to make a  total of  4.01p for  the 
financial year versus 3.87p in the previous year - an increase of 3.62%.  The 
Company also  announced  and  paid  its first  interim  dividend  of  the  new 
financial year at 0.9p  up from 0.88p  in the previous year  - an increase  of 
2.27%.

Regarding the portfolio, earlier  in the period we  added Moto Finance  10.25% 
2017, and increased  holdings in Southern  Water 8.50% 2019,  House of  Fraser 
8.875% 2018, Cable and  Wireless 8.625% 2019 replacing  Phones 4U 9.50%  2018, 
Tullett Prebon 7.04% 2016 and the  Cable and Wireless 5.75% Convertible  which 
was called in early July. In the latter half of the period we participated in
new issues by Arcelor Mittal  8.75% Perpetual, Louis Dreyfus 8.50%  Perpetual, 
Tizir 9% 2017 and two convertible bonds, Lake Shore Gold Corporation 6.25%  CB 
2017 and Gran Columbia Gold 10% CB 2017.

The company continued to look for opportunities to take profits in bonds which
had  served  their  purpose  in  our  opinion,  examples  of  which  would  be 
AlliancePharma 8% Convertible 2013 and  British Airways 8.75% 2016, and  where 
possible reinvest in similar opportunities below  par, in the case of  British 
Airways their 6.75% Euro Preference Share.

We continue to believe that the Global High Yield market offers  opportunities 
in relation to the investment grade sector.

Enquiries:

Ian Francis
Investment Manager
New City Investment Managers            Tel: 0207 201 6900

Martin Cassels
R&H Fund Services Limited            Tel: 0131 625 2951

Beth Harris
Newgate Threadneedle                Tel: 0207 653 9853
Unaudited Condensed Income Statement
For the six months ended 31 December 2012

                                        Six months ended 31 December 2012
                                             £ '000    £'000    £'000
                                    Notes      Revenue     Capital       Total
Capital gains on investments
Gains on investments                  3              -       9,903       9,903
Exchange losses                                      -        (18)        (18)
Revenue
Income                                4          6,052           -       6,052
Total income                                     6,052       9,885      15,937
Expenses
Investment management fee             5          (409)       (136)       (545)
Other expenses                                   (235)           -       (235)
Total expenses                                   (644)       (136)       (780)
Profit before finance costs and                  5,408       9,749      15,157
taxation
Finance costs
Interest payable and similar                      (89)        (30)       (119)
charges
Profit before taxation                           5,319       9,719      15,038
Irrecoverable withholding tax                     (85)           -        (85)
Profit after taxation                            5,234       9,719      14,953
Earnings per ordinary share (pence)   6          2.38p       4.41p       6.79p

The total column of this statement represents the Company's Income  Statement, 
prepared in  accordance  with  IFRS. The  supplementary  revenue  return  and 
capital return  columns are  both  prepared under  guidance published  by  the 
Association of Investment Companies.

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

No operations were acquired or discontinued during the period.

Unaudited Condensed Income Statement
For the six months ended 31 December 2011

                                        Six months ended 31 December 2011
                                             £ '000    £'000    £'000
                                    Notes      Revenue     Capital       Total
Capital losses on investments
Losses on investments                                -    (12,336)    (12,336)
Exchange gains                                       -          13          13
Revenue
Income                                5          5,914           -       5,914
Total income                                     5,914    (12,323)     (6,409)
Expenses
Investment management fee             5          (375)       (125)       (500)
Other expenses                                   (243)           -       (243)
Total expenses                                   (618)       (125)       (743)
Profit/(loss) before finance costs               5,296    (12,448)     (7,152)
and taxation
Finance costs
Interest payable and similar                      (86)        (28)       (114)
charges
Profit/(loss) before taxation                    5,210    (12,476)     (7,266)
Irrecoverable withholding tax                     (36)           -        (36)
Profit/(loss) after taxation                     5,174    (12,476)     (7,302)
Earnings per ordinary share (pence)   6          2.49p     (6.01)p     (3.52)p

The total column of this statement represents the Company's Income  Statement, 
prepared in  accordance  with  IFRS. The  supplementary  revenue  return  and 
capital return  columns are  both  prepared under  guidance published  by  the 
Association of Investment Companies.

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

No operations were acquired or discontinued during the period.

Audited Condensed Income Statement
For the year ended 30 June 2012

                                              Year ended 30 June 2012
                                              £'000    £'000    £'000
                                     Notes     Revenue     Capital       Total
Capital losses on investments
Losses on investments                                -     (7,350)     (7,350)
Exchange losses                                      -        (21)        (21)
Revenue
Income                                 4        11,916           -      11,916
Total income                                    11,916     (7,371)       4,545
Expenses
Investment management fee              5         (776)       (259)     (1,035)
Other expenses                                   (464)           -       (464)
Total expenses                                 (1,240)       (259)     (1,499)
Profit/(loss) before finance costs              10,676     (7,630)     (3,046)
and taxation
Finance costs
Interest payable and similar charges             (157)        (52)       (209)
Profit/(loss) before taxation                   10,519     (7,682)       2,837
Irrecoverable withholding tax                     (63)           -        (63)
Profit/(loss) after taxation                    10,456     (7,682)       2,774
Earnings per ordinary share (pence)    6         4.89p     (3.59)p       1.30p

The total column of this statement represents the Company's Income  Statement, 
prepared in  accordance  with  IFRS. The  supplementary  revenue  return  and 
capital return  columns are  both  prepared under  guidance published  by  the 
Association of Investment Companies.

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

No operations were acquired or discontinued during the year.

Condensed Balance Sheet
As at 31 December 2012

                                           As at            As at        As at
                                31 December 2012 31 December 2011 30 June 2012
                                     (unaudited)      (unaudited)    (audited)
                          Notes            £'000            £'000        £'000
Non-current assets
Investments held at fair                 142,414          119,947      127,544
value
Current assets
Other receivables                          3,181            3,448        4,739
Cash at bank                                   -                -           55
                                           3,181            3,448        4,794
Total assets                             145,595          123,395      132,338
Current liabilities
Bank loan facility                      (11,331)          (5,314)      (7,463)
Other payables                             (162)            (132)        (726)
Total liabilities                       (11,493)          (5,446)      (8,189)
Net assets                               134,102          117,949      124,149
Share capital and
reserves
Stated capital account                    66,680           66,680       66,680
Special distributable                     50,385           50,385       50,385
reserve
Capital reserve                            7,506          (7,007)      (2,213)
Revenue reserve                            9,531            7,891        9,297
Equity shareholders'                     134,102          117,949      124,149
funds
Net asset value per         7             60.88p           53.55p       56.36p
ordinary share (pence)

Condensed Statement of Changes in Equity

For the six months ended 31 December 2012 (unaudited)

                             Stated       Special
                            capital distributable Capital Revenue
                            account       reserve reserve reserve   Total
                      Notes   £'000         £'000   £'000   £'000   £'000
At 1 July 2012               66,680        50,385 (2,213)   9,297 124,149
Profit for the period             -             -   9,719   5,234  14,953
Dividends paid            2       -             -       - (5,000) (5,000)
At 31 December 2012          66,680        50,385   7,506   9,531 134,102

For the six months ended 31 December 2011 (unaudited)

                                 Stated       Special
                                capital distributable  Capital Revenue
                                account       reserve  reserve reserve   Total
                          Notes   £'000         £'000    £'000   £'000   £'000
At 1 July 2011                   57,567        50,385    5,469   7,192 120,613
(Loss) / profit for the               -             - (12,476)   5,174 (7,302)
period
Dividends paid                2       -             -        - (4,475) (4,475)
Issue of shares                   9,113             -        -       -   9,113
At 31 December 2011              66,680        50,385  (7,007)   7,891 117,949

For the year ended 30 June 2012 (audited)

                                  Stated       Special
                                 capital distributable Capital Revenue
                                 Account       reserve reserve reserve   Total
                         Notes     £'000         £'000   £'000   £'000   £'000
As at 1 July 2011                 57,567        50,385   5,469   7,192 120,613
(Loss) / profit for the                     -        - (7,682)  10,456   2,774
year
Dividends paid                    2         -        -       - (8,351) (8,351)
Issue of shares                         9,113        -       -       -   9,113
At 30 June 2012                        66,680   50,385 (2,213)   9,297 124,149

Condensed Cash Flow Statement
For the six months ended 31 December 2012

                                      Six months       Six months
                                           ended            ended   Year ended
                                31 December 2012 31 December 2011 30 June 2012
                                     (unaudited)      (unaudited)    (audited)
                                           £'000            £'000        £'000
Operating activities
Profit/(loss) before finance              15,157          (7,152)        3,046
costs and taxation
(Gains)/losses on investments            (9,903)           12,336        7,350
Exchange losses/(gains)                       18             (13)           21
Decrease/(increase) in other                 593            (127)        (454)
receivables
(Decrease) / increase in other               (5)             (10)            3
payables
Net cash inflow from operating             5,860            5,034        9,966
activities before interest and
taxation
Interest paid                              (109)            (144)        (226)
Irrecoverable withholding tax               (85)             (36)         (63)
paid
Net cash inflow from operating             5,666            4,854        9,677
activities
Investing activities
Purchases of investments                (35,603)         (17,489)     (45,347)
Sales of investments                      31,032           15,582       40,433
Net cash outflow from investing          (4,571)          (1,907)      (4,914)
activities
Financing activities
Equity dividends paid                    (5,000)          (4,475)      (8,351)
Drawdown/(repayment) of bank               3,164          (7,613)      (5,464)
loan facility
Issue of ordinary shares                       -            9,113        9,113
Net cash outflow from financing          (1,836)          (2,975)      (4,702)
(Decrease) / increase in cash              (741)             (28)           61
and cash equivalents
Net debt at the start of the             (7,408)         (12,912)     (12,912)
period
(Drawdown)/repayment of bank             (3,164)            7,613        5,464
loan facility
Exchange (losses)/gains                     (18)               13         (21)
Net debt at the end of the              (11,331)          (5,314)      (7,408)
period

Notes to the Accounts

1.The unaudited  interim results  which cover  the six  month period  to  31 
    December  2012  have  been  prepared  in  accordance  with   International 
    Accounting Standard ('IAS')  34 - 'Interim  Financial Reporting', and  the 
    accounting polices as set out in the statutory accounts of the Company for
    the year ended 30 June 2012. 

2.  Dividends
Amounts recognised as distributions to equity holders in the period.

                               Six months ended Six months ended  Year ended
                               31 December 2012 31 December 2011 30 June 2012
                                           Rate             Rate          Rate
                                 £'000  (pence)   £'000  (pence) £'000 (pence)
In respect of the previous
period
Fourth interim dividend          3,018     1.37   2,685     1.32 2,685    1.32
In respect of the period under
review:
First interim dividend           1,982     0.90   1,790     0.88 1,790    0.88
Second interim dividend              -        -       -        - 1,938    0.88
Third interim dividend               -        -       -        - 1,938    0.88
                                 5,000            4,475          8,351

    A second interim dividend in respect of the year ended 30 June 2013 of
0.90p per ordinary share was paid on  22 February 2013 to shareholders on  the 
register on  1  February  2013. In  accordance  with  International  Financial 
Reporting Standards  ('IFRS')  this  dividend  has  not  been  included  as  a 
liability in these accounts.

3.Included within gains on investments for the period ended 31 December 2012
    are realised gains of £2,838,000 and unrealised gains of £7,065,000.

3.Income

    The breakdown of income for the period was as follows:

    Six months ended    Six months ended    Year ended
    31 December     31 December    30 June
    2012    2011     2012
 £'000  £'000  £'000
    Income from investments:
    Dividend income    514    627    1,220
    Interest on fixed interest securities    5,537    5,287   
10,696
 Other income:
     Deposit interest    1    -    -
    Total income    6,052    5,914    11,916

3.Investment Management Fee

The Company's investment  manager is  CQS Cayman  Limited Partnership  ('CQS') 
which has delegated  this function  to its  wholly owned  subsidiary New  City 
Investment Managers. CQS receive a  basic monthly fee at  the rate of 0.8  per 
cent per annum of the Company's  total assets (less current liabilities  other 
than bank  borrowings),  payable  in arrears.  During  the  period  investment 
management fees of £545,000 were incurred, of which £82,000 was payable at the
period end.

3.Earnings per ordinary share

    The revenue earnings per  ordinary share is based on the profit  after 
taxation of  £5,234,000  (31  December  2011: £5,174,000  and  30  June  2012: 
£10,456,000) and  on a  weighted  average of  220,267,581 (31  December  2011: 
207,620,082 and 30 June 2012: 213,909,275) ordinary shares in issue throughout
the period.

    The capital profit per  ordinary share is based on a net capital  gain 
of £9,719,000 (31 December 2011: a net capital loss of £12,476,000 and 30 June
2012: a  net  capital  loss  of  7,682,000)  and  on  a  weighted  average  of 
220,267,581 (31  December 2011:  207,620,082 and  30 June  2012:  213,909,275) 
ordinary shares in issue throughout the period.

3.Net asset value per ordinary share

    The net asset value per  ordinary share is based on net assets at  the 
period end of £134,102,000 (31 December  2011: £117,949,000 and 30 June  2012: 
£124,149,000) and on 220,267,581  (31 December 2011:  220,267,581 and 30  June 
2012: 220,267,581) ordinary  shares, being  the number of  ordinary shares  in 
issue at the period end.

3.Related Parties

    Mr G Ross is  a Director of the Company Secretary and  Administrators, 
R&H Fund Services (Jersey) Limited and  R&H Fund Services Limited, which  both 
receive fees from the Company. During the period fees of £66,000 were incurred
(excluding the director's fee to Mr G Ross).

3.Financial information

These are not statutory accounts in terms of Section 434 of the Companies  Act 
2006 and have  not been audited  or reviewed by  the Company's auditors.  The 
information for the year ended 30 June 2012 has been extracted from the latest
published financial statements which received an unqualified audit report  and 
have been filed  with the Registrar  of Companies. No  statutory accounts  in 
respect of  the  period after  30  June 2012  have  been reported  on  by  the 
Company's auditors or delivered to the Registrar of Companies.

3.The report and accounts for the six months ended 31 December 2012 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

Directors' Statement of Principal Risks and Uncertainties

The Company's assets consist principally  of listed fixed interest  securities 
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.  Other 
key risks faced by the Company  relate to investment and strategy,  financial, 
earnings and dividend, operational and  regulatory matters. These risks,  and 
the way in  which they are  managed, are  described in more  detail under  the 
heading 'Principal risks and risk management' within the Directors' Report and
Business Review contained within the Company's annual report and accounts  for 
the year ended 30 June 2012. The Company's principal risks and  uncertainties 
have not changed materially since the date of the report and are not  expected 
to change materially for the rest of the Company's financial year.

Directors' Responsibility Statement in Respect of the Interim Report

The Directors are responsible for preparing the Interim Report.

We confirm that to the best of our knowledge:

· the condensed set of financial  statements have been prepared in  accordance 
with IAS 34 'Interim Financial Reporting' and give a true and fair view of the
assets, liabilities, financial position and return of the Company;

· the Chairman's Statement includes a fair review of the information  required 
by the Disclosure and Transparency  Rules ('DTR') 4.2.7R, being an  indication 
of important events  that have  occurred during the  first six  months of  the 
financial year and their impact on the financial statements;

· the Statement  of Principal Risks  and Uncertainties shown  above is a  fair 
review of the information required by DTR 4.2.7R; and

· the  condensed set  of financial  statements include  a fair  review of  the 
information required by DTR 4.2.8R, being related party transactions that have
taken place  in the  first six  months of  the financial  year and  that  have 
materially affected  the  financial position  or  performance of  the  Company 
during that  period,  and  any  changes  in  the  related  party  transactions 
described in the last Annual Report that could do so

On behalf of the Board
J G West
Chairman
27 February 2013

------------------------------------------------------------------------------

This announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
the
information contained therein.

Source: New City High Yield Fund Ltd via Thomson Reuters ONE
HUG#1681612
 
Press spacebar to pause and continue. Press esc to stop.