TIDMCHY
City Merchants High Yield Trust plc
Half-Yearly Financial Report for the Six Months to 30 June 2011
Key Facts
City Merchants High Yield Trust plc is a UK investment trust listed on the
London Stock Exchange.
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.
Share Capital and Structure
As at 30 June 2011, the Company's authorised share capital was GBP103.5 million
divided into 5,174,116,742 ordinary shares of 2p each of which 72,799,105 were
issued fully paid.
Gearing is provided by bank borrowing. At 30 June 2011, the Company was not
geared.
Performance Statistics %
Total Return for the Six Months Ended 30 June 2011 Change
Total return per ordinary share +3.6
FTSE All-Share Index* +3.0
FTSE Government Securities - All Stocks Index* +1.7
At At
30 June 31 December
2011 2010
Capital Return
Net asset value per ordinary share 169.62p 168.98p +0.4
Mid-market price per ordinary share 174.38p 173.00p +0.8
Premium per ordinary share 2.8% 2.4%
FTSE All-Share Index* +1.1
FTSE Government Securities - All Stocks -0.4
Index*
*Sources: Thomson Reuters.
Interim Management Report Incorporating the Chairman's Statement
Chairman's Statement
My statement in the 2010 annual report expressed the belief that the portfolio
remained well positioned to continue to provide opportunities for modest growth
while producing an attractive level of income for shareholders. I am pleased to
report that this has been achieved during the six months to 30 June 2011.
In the six months to 30 June 2011, the total return was 3.6% which compares
favourably with the average return of 2.5% from the funds in the Investment
Management Association Sterling Strategic Bond sector.
The Board has declared two interim dividends in respect of the six months to 30
June 2011 - one of 2.5p per share paid in May and another of 2.5p per share to
be paid on 26 August 2011. While actual dividends will depend on revenue
receipts during the remainder of the year, the Board continues to target total
dividends of 10p per share for 2011.
I am pleased to report that after the period end Exeter Asset Management, the
Company's former manager, obtained repayment from HM Revenue & Customs of VAT
paid by the Company in the years up to 2005. The total amount received was GBP
410,000. Reflecting allocations made when the VAT was originally charged, GBP
285,000 of this payment has been credited to revenue and GBP125,000 to capital.
Interest on this repayment of GBP215,000 was also received and has been credited
wholly to revenue. This payment represents the final instalment of the total
VAT repayable to the Company
Clive Nicholson
Chairman
18 August 2011
Manager's Investment Report
Market background
The first half of 2011 was a positive period overall for the high yield debt
market as a strong supply of issuance was met with healthy investor appetite
for risk assets. Indeed, many of the key features of the market were consistent
with those seen in 2010. The fundamentals of the market were firm, buoyed by
growing earnings and stronger corporate balance sheets. The default rate was
low. According to Moody's, in the second quarter the European high yield
default rate was 1.4%, down from 5.6% a year before. Supply was high - by the
end of June European high yield issuance reached 85% of the total for all of
2010. The type of issuance in the market was of higher quality, with more
senior secured paper and less leverage. As market support held up and yields
and spreads fell further, many companies took the chance to raise new capital
and extend the maturity of their debt at low rates. At the same time, just as
in 2010, the market was prone to bouts of volatility, prompted more than
anything else by the sovereign debt crisis.
According to data from Merrill Lynch, the total return on European high yield
in the first six months of 2011 was 4.9% (in local currency terms). Markets
were positive in the first quarter and through April and May, before giving
back some of their gains in June as sovereign debt concerns flared up again.
Spreads over government bonds were 48bps tighter at 576bps. Aggregate yields
fell over the period by 15bps to close June at 8.41%. High yield outperformed
investment grade. Sterling investment grade bonds had a total return of 3.2%
(in sterling terms), with yields down 10bps. Bank capital was the strongest
section of the market. Sterling Tier 1 subordinated debt had a total return of
7.7% for the period, its yield falling 66bps to 8.7%.
Concern over the sovereign debt of Greece, Ireland and Portugal has deepened as
the months of 2011 have passed. Following Portugal's application in April, all
three countries have now received financial aid from the IMF and the European
Union. There remains great uncertainty over whether further aid will be
required, and if so, how much and how it will be delivered. With the
possibility of a default event becoming more widely accepted, the yield on 10
year Greek bonds rose 386bps over the six months to the end of June to reach
16.3%. The spread over German bunds widened by 381bps to 1332bps. Irish and
Portuguese yields rose to 11.7% and 10.9% and so their spreads also widened, to
867bps and 787bps.
The rate of CPI inflation in the UK was 4.2% in June, up from 3.7% in December
and well over twice the Bank of England's medium term target of 2%. However,
the Bank's Monetary Policy Committee (MPC) continued to look through this to a
weak underlying UK economy, holding interest rates at 0.5% throughout the
period.
Since the end of the reporting period, volatility in the fixed interest markets
has increased significantly. There has been a `risk-off' trend in sentiment
driven, as in other recent periods of volatility, by concerns over slowing
economic growth in the US, the UK and Europe and, in particular, by the
developing debt problems of the Eurozone. There has been strong support for
core government bonds, notwithstanding S&P's downgrade of its long-term US debt
rating to AA+. Corporate bond spreads have widened and bank capital has been a
weak sector on concerns about exposure to sovereign debt.
Portfolio strategy
The Net Asset Value of the Company (`NAV') ended 2010 at 168.98p. It rose to
171.4p in mid-May before falling back as risk aversion took hold of the market
in June. The NAV was 169.62p at the close of June. The Company's cash position
remains near 5% and its borrowing facility is currently undrawn.
After their strong rally of the last couple of years, high yield bonds made
further, albeit more modest, progress in the first half of 2011. The portfolio
managers believe they can find opportunities, particularly in the volatile
market conditions we have recently seen, and continue to favour better quality
(BB and B rated) high-yield issuers as well as higher yielding (BBB rated)
investment-grade names. They were active in the new issuance and secondary
markets in the first half of the year. Purchases included Jaguar Land Rover
8.125% (Auto, B+ rated), Southern Water 8.5% (Utility, BB- rated), Thames Water
7.75% (Utility, B rated) and Matalan 8.875% (Retail, BB rated). The overall
credit quality of the Company's portfolio has risen as exposure to BBB and BB
has increased and exposure to B and below has fallen. The Company's exposure to
Utilities has also risen, to 10.8% at the end of the period.
The portfolio managers continue to believe that financials, banks in
particular, offer attractive opportunities. Their reasons remain the same. They
think that the combination of structural reform, implementation of Basel III
guidelines and rising capital levels will be a powerful support for
subordinated bank debt for years to come. In their opinion, aggregate yields on
this type of debt still offer real value even in the context of their higher
volatility. Banks have continued to bring attractive deals to the market as
they seek to bolster and reorganise their capital structure for the evolving
regulatory environment. Investment was made in the widely supported contingent
capital issue brought to the market by Credit Suisse earlier in the year and
Barclays 9.25% (Upper Tier 2) was also added.
The high yield market has been sensitive to the sovereign debt crisis
throughout the period. Such a relationship can create opportunities when
security prices move away from fundamental value due to more general shifts in
market sentiment. With its current level of liquidity the Company has the
flexibility to take advantage of such opportunities as they arise.
Outlook
The market is likely to continue to experience periods of volatility,
especially as the sovereign debt crisis in the Eurozone evolves. There is still
uncertainty as to the support that will be given by the Eurozone authorities to
member states and how it will be delivered. What role the private sector will
play in sovereign debt relief measures is another question that can increase
volatility, both in government bond markets and more widely.
Away from the sovereign debt crisis, economic data in the US and the UK over
the past several months has been predominantly negative. In both economies
growth expectations have fallen in the face of weak consumer demand. Poor
personal earnings growth, low rates of employment growth and rising
unemployment are depressing consumer confidence and spending. In the Eurozone
growth is stronger, albeit concentrated in the core economies of Germany,
France and surrounding countries. Here too, however, growth expectations are
beginning to wane as business sentiment and production indicators have become
weaker.
The MPC has maintained interest rates at a record low level. In recent months
its comments have been more dovish. At June's meeting, votes in favour of
retaining the current record low rate rose to seven of the nine members from
six before. New member Ben Broadbent, replacing the `hawk' Andrew Sentance,
voted with the majority. It is not expected that there will be significant
interest rate rises in the near future.
In such an environment of low growth and low interest rates, combined with
strong corporate fundamentals, the portfolio managers will continue to seek
opportunities to capture attractive yields and they believe that the Company's
portfolio should continue to provide an appealing choice for investors seeking
income.
Invesco Asset Management Limited
Manager
Paul Read Paul Causer
Portfolio Managers
18 August 2011
Related Parties
Invesco Asset Management Limited (`IAML'), a wholly-owned subsidiary of Invesco
Limited, acts as Manager and Company Secretary to the Company. Details of
IAML's services and fee arrangements are given in the Company's Annual
Financial Report, which is available on the Manager's website.
Principal Risks and Uncertainties
There is no guarantee that the Company's investment objective will be achieved
or will provide the returns sought by the Company. The principal risk factors
relating to the Company can be divided into the following areas:
- Investment Policy (incorporating the Investment Objective) and Process;
- Market Movement and Portfolio Performance;
- High-Yield Fixed-Interest Securities;
- Gearing;
- Derivatives;
- Regulatory and Tax Related;
- Resources: Reliance on Third Party Providers
- The Ordinary Shares; and
- Shareholder Relationships.
A detailed explanation of these factors can be found in pages 26 to 28 of the
2010 Annual Financial Report, which is available on the Manager's website.
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 six months under review.
Going Concern
The financial statements are prepared on a going concern basis. At the Annual
General Meeting held on 26 May 2011, the shareholders passed an ordinary
resolution releasing the Directors from their obligation to convene an
Extraordinary General Meeting in 2011 to wind up the Company. 99.2% of all
votes cast were in favour of the continuation of the Company.
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.
Accordingly, the accounts do not include any adjustments which might arise from
the reconstruction or liquidation of the Company.
Directors' Responsibility Statement
in respect of the preparation of the half-yearly financial report.
The Directors are responsible for preparing the half-yearly financial report,
using accounting policies consistent with applicable law and UK Accounting
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 the Accounting
Standards Board's Statement `Half-Yearly Financial Report';
* the interim management report includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R of the FSA'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 auditors.
Signed on behalf of the Board of Directors.
Clive Nicholson
Chairman
18 August 2011
Thirty Largest Investments at 30 June 2011
Market
Moody/S&P Country of Value % of
Issuer/Issue Rating Sector Incorporation GBP'000 Portfolio
LBG Capital Financial UK
7.975% Sep 15 24 Ba3/BB 3,307
6.385% May 12 20 Ba2/BB+ 1,170
9% Dec 15 19 Ba2/BB+ 968
6.439% May 23 20 Ba3/BB 780
16.125% Dec 10 24 Ba2/BB+ 134
6,359 5.6
Societe Generale Financial France
8.875% FRN Perpetual Baa2/BBB+ 4,053 3.6
General Motors Consumer USA
Goods
Pfd USD50.00 NR/NR 2,681
USD0.01 Equity 623
Wts Jul 10 16 WR/NR 399
Wts Jul 10 19 WR/NR 297
4,000 3.6
Premier Farnell Industrials UK
Pfd 89.2P Cum Cnv Equity 3,616 3.2
Ford Motor Consumer USA
Goods
7.45% Jul 16 31 Ba3/B+ 2,810 2.5
Aviva Financial UK
6.125% Perpetual A3/BBB+ 2,599 2.3
Citigroup Financial USA
Pfd Jun FRN 28 67 Ba1/BB+ 1,817
Pfd USD100 Equity 689
Inc Com USD0.01 Equity 52
2,558 2.3
Balfour Beatty Industrials UK
Prf 10.75P Gross Equity 2,464 2.2
Intergen Oil & Gas Holland
9.5% Jun 30 17 Ba3/BB- 2,140
8.5% Jun 30 17 Ba3/BB- 237
2,377 2.1
Cemex Sab Consumer USA
Goods
4.875% Cnv Mar 15 15 NR/NR 1,820
9.25% May 12 20 NR/NR 526
2,346 2.1
Ecclesiastical Financial UK
Prf 8.625% Non Cum Irrd NR/NR 2,190 1.9
American International Financial USA
Group
8.625% FRN May 22 68 Baa2/BBB 1,021
8.175 May 15 68 Baa2/BBB 671
4.875% FRN Mar 15 67 Baa2/BBB 437
2,129 1.9
Credit Agricole Financial France
7.589% FRN Perpetual A3/BBB+ 2,000 1.8
Market
Moody/S&P Country of Value % of
Issuer/Issue Rating Sector Incorporation GBP'000 Portfolio
Unity Media Consumer Germany
Services
9.625% Dec 1 19 B3/B- 1,948 1.7
DFS Consumer UK
Goods
9.75% Jul 15 17 B1/B 1,940 1.7
Barclays Financial UK
9.25% Perpetual Baa2/A- 1,030
6.625% Mar 3 22 Baa1/A 899
1,929 1.7
Catlin Financial USA
7.249% FRN Perpetual NR/BBB+ 1,843 1.6
First Hydro Finance Utilities UK
9% Jul 31 21 NR/NR 1,837 1.6
Santos Finance Financial Australia
8.25% Sep 22 70 NR/BB 1,833 1.6
BAC Capital Trust Financial USA
5.25% Aug 10 35 Baa3/BB+ 1,775 1.6
Scottish & Southern Utilities UK
Energy
5.025% Perpetual Baa2/BBB 1,765 1.6
RWE Utilities Germany
4.625% FRN Perpetual Baa1/BBB 1,729 1.5
Legrand Industrials France
8.5% Deb Feb 15 25 Baa2/BBB+ 1,568 1.4
REA Finance Consumer Holland
Goods
9.5% Dec 31 17 NR/NR 1,560 1.4
Wind Acquisition Consumer Italy
Services
11.75% Jul 15 17 B2/BB- 767
7.375% Feb 15 18 Ba2/BB 719
1,486 1.3
UBS Financial
3.22% Jul 31 12 Aa3/A+ Switzerland 673
8.836% FRN Perpetual Baa3/BBB- Jersey 668
1,341 1.2
Suez Utilities France
4.82% FRN Perpetual Baa2/NR 1,320 1.2
Rexam Industrials UK
6.75% FRN Jun 29 67 Ba2/BB 1,237 1.1
General Accident Financial UK
Prf 8.875% NR/NR 1,236 1.1
Novae Financial UK
8.375% Apr 27 17 Ba1/NR 1,112 1.0
66,960 59.4
Other investments 45,758 40.6
Total investments 112,718 100.0
Condensed Income Statement
Year to
Six Months to Six Months to 31 December
30 June 2011 30 June 2010 2010
(Unaudited) (Unaudited) (Audited)
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains on investments - 3,148 3,148 - 336 336 9,790
Foreign exchange (losses)/ - (1,648) (1,648) - 1,692 1,692 986
gains
Income
UK dividends 346 - 346 279 - 279 525
UK unfranked investment 1,379 - 1,379 1,406 - 1,406 2,754
income - interest
Overseas interest 2,410 - 2,410 3,201 - 3,201 5,912
Overseas dividends 84 - 84 52 - 52 83
Deposit interest 12 - 12 9 - 9 21
Scrip dividends 2 - 2 14 - 14 76
Interest on VAT recovered 215 - 215 - - - -
- note 6
4,448 1,500 5,948 4,961 2,028 6,989 20,147
Investment management fee (295) (159) (454) (277) (149) (426) (866)
VAT recoverable on 285 125 410 - - - -
management fee - note 6
Other expenses (204) (6) (210) (246) (1) (247) (450)
Net return before finance 4,234 1,460 5,694 4,438 1,878 6,316 18,831
costs and taxation
Finance costs (20) (11) (31) (76) (41) (117) (179)
Return on ordinary 4,214 1,449 5,663 4,362 1,837 6,199 18,652
activities before taxation
Taxation (1,114) (72) (1,186) (4) - (4) (1,093)
Return on ordinary 3,100 1,377 4,477 4,358 1,837 6,195 17,559
activities after taxation
Return per ordinary share 4.3p 1.9p 6.2p 6.0p 2.5p 8.5p 24.1p
- note 2
The total column represents the Company's profit and loss account. The
supplementary revenue and capital columns are prepared 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 statement of recognised gains
or losses is therefore presented. No operations were acquired or discontinued
in the period.
Condensed Balance Sheet
Registered in England and Wales No. 2649592 30 June 30 June 31 December
2011 2010 2010
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Fixed assets
Investments at fair value through profit or
loss:
United Kingdom 52,896 48,693 50,773
Overseas 59,822 68,292 60,672
112,718 116,985 111,445
Current assets
Prepayments and accrued income 2,456 2,514 2,495
Deferred tax asset 2,730 5,000 3,921
VAT recoverable on management fees and 625 - -
related interest
Unrealised gain on forward currency contract - 902 -
Cash 6,829 6,041 5,894
12,640 14,457 12,310
Creditors: amounts falling due within one
year
Bank loan - (15,078) -
Amounts due to brokers (502) - -
Accruals (340) (348) (341)
Unrealised loss on forward currency contract (1,031) - (402)
(1,873) (15,426) (743)
Net current assets/(liabilities) 10,767 (969) 11,567
Net assets 123,485 116,016 123,012
Capital and reserves
Share capital 1,456 1,456 1,456
Share premium 140,011 140,011 140,011
Special reserve 11,644 11,644 11,644
Capital redemption reserve 8,410 8,410 8,410
Capital reserve (41,849) (52,911) (43,226)
Revenue reserve 3,813 7,406 4,717
Shareholders' funds 123,485 116,016 123,012
Net asset value per ordinary share - note 3 169.62p 159.36p 168.98p
Condensed Cash Flow Statement
Six Months Six Months Year to
to to
30 June 30 June 31 December
2011 2010 2010
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Net return before finance costs and 5,694 6,316 18,831
taxation
Adjustment for gains on investments (3,148) (336) (9,790)
Adjustment for exchange losses/(gains) 1,648 (1,692) (986)
VAT recoverable on management fees and (625) - -
related interest
Scrip dividend (2) - -
Decrease in debtors 37 100 119
(Decrease)/increase in creditors (20) 32 42
Tax on overseas dividends 7 (4) (14)
Net cash flow from operating activities 3,591 4,416 8,202
Servicing of finance (12) (122) (201)
Capital expenditure and financial
investment
Purchase of investments (30,299) (38,213) (61,078)
Sale of investments 32,678 36,216 74,075
Equity dividends paid (4,004) (4,249) (8,617)
Cash inflow/(outflow) before financing 1,954 (1,952) 12,381
Management of liquid resources
Cash movement on short-term deposits (309) - (3,334)
Financing
Increase/(decrease) in borrowings - 2,806 (11,108)
Increase/(decrease) in cash 1,645 854 (2,061)
Cash flow from movement in liquid 309 - 3,334
resources
Cash (inflow)/outflow from (increase)/ - (2,806) 11,108
decrease in debt
Change in net funds/(debt) resulting from 1,954 (1,952) 12,381
cash flows
Translation difference (1,019) 1,164 1,762
Movement in net funds/(debt) in the period 935 (788) 14,143
Net funds/(debt) at beginning of period 5,894 (8,249) (8,249)
Net funds/(debt) at end of the period 6,829 (9,037) 5,894
Analysis of change in net debt:
Brought forward:
Cash 5,894 2,859 2,859
Bank loans - (11,108) (11,108)
Net funds/(debt) brought forward 5,894 (8,249) (8,249)
Cash inflow/(outflow) from bank 1,954 (1,952) 12,578
Exchange movements (1,019) 1,164 1,565
Net funds/(debt) at end of the period 6,829 (9,037) 5,894
Condensed Reconciliation of Movements in Shareholders' Funds
Capital
Share Share Special Redemption Capital Revenue
Capital Premium Reserve Reserve Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year Ended 31 December 2010 and Six Months Ended 30 June 2011
At 31 December 2009 1,456 140,011 11,644 8,410 (54,748) 7,297 114,070
Return for the period - - - - 11,522 6,037 17,559
from the income
statement
Dividends paid - note - - - - - (8,617) (8,617)
4
At 31 December 2010 1,456 140,011 11,644 8,410 (43,226) 4,717 123,012
Return for the period - - - - 1,377 3,100 4,477
from the income
statement
Dividends paid - note - - - - - (4,004) (4,004)
4
At 30 June 2011 1,456 140,011 11,644 8,410 (41,849) 3,813 123,485
Six Months Ended 30 June 2010
At 31 December 2009 1,456 140,011 11,644 8,410 (54,748) 7,297 114,070
Return for the period - - - - 1,837 4,358 6,195
from the income
statement
Dividends paid - note - - - - - (4,249) (4,249)
4
At 30 June 2010 1,456 140,011 11,644 8,410 (52,911) 7,406 116,016
Notes to the Condensed Financial Statements
1. Accounting Policies
The condensed financial statements have been prepared using the same accounting
policies as those adopted in the annual financial report for 31 December 2010,
and are prepared in accordance with the Statement of Recommended Practice
(`SORP') `Financial Statements of Investment Trust Companies and Venture
Capital Trusts' issued by the Association of Investment Companies in January
2009.
2. Basis of Returns
Six Months to Six Months to Year Ended
30 June 30 June 31 December
2011 2010 2010
Returns after tax:
Revenue GBP3,100,000 GBP4,358,000 GBP6,037,000
Capital GBP1,377,000 GBP1,837,000 GBP11,522,000
Total return after tax GBP4,477,000 GBP6,195,000 GBP17,559,000
Weighted average number of shares 72,799,105 72,799,105 72,799,105
in issue during the period
3. Basis of Net Asset Value per Ordinary Share
At At At
30 June 30 June 31 December
2011 2010 2010
Shareholders' funds GBP123,485,000 GBP116,016,000 GBP123,012,000
Number of shares in issue at the 72,799,105 72,799,105 72,799,105
period end
4. Dividends on Ordinary Shares - Dividends Paid
Six Months to Six Months to Year Ended
30 June 30 June 31 December
Quarterly 2011 2010 2010
Year dividend Rate GBP'000 GBP'000 GBP'000
2009 4th 1p - 609 609
interim
2009 5th 2p - 1,456 1,456
interim
2009 6th 1p - 728 728
interim
2010 1st 2p - 1,456 1,456
interim
2010 2nd 3p - - 2,184
interim
2010 3rd 3p - - 2,184
interim
2010 4th 3p 2,184 - -
interim
2011 1st 2.5p 1,820 - -
interim
Total dividends 4,004 4,249 8,617
paid
The 2nd interim dividend for 2011 of 2.5p has been declared and will be paid on
26 August 2011 to shareholders on the register on 29 July 2011.
5. Ordinary Shares of 2p each
Six Months to Six Months to Year Ended
30 June 30 June 31 December
2011 2010 2010
Nominal number of Ordinary Shares
in issue:
Brought forward 72,799,105 72,799,105 72,799,105
Issued in period - - -
Carried forward 72,799,105 72,799,105 72,799,105
6. After the period end the Company received VAT refunds on management fees
from its former manager of GBP410,000. These were accrued at the period end with
GBP285,000 credited to revenue and GBP125,000 to capital, being the same
proportions as originally charged to the revenue and capital accounts. In
addition, GBP215,000 was received for interest on the VAT recovered and has been
credited wholly to revenue. The after tax credits to revenue and capital were
respectively GBP367,000 and GBP92,000, being the equivalent of 0.50p and 0.13p per
share respectively.
7. It is the intention of the Directors to conduct the affairs of the Company
so that it satisfies the conditions for approval as an investment trust company
set out in section 1159 of the Corporation Tax Act 2010.
8. The financial information contained in this half-yearly financial report
does not constitute statutory accounts within the meaning of section 434 of the
Companies Act 2006. The half yearly reports to 30 June 2011 and 30 June 2010
are unaudited. The figures and financial information for the year ended 31
December 2010 are extracted and abridged from the latest published accounts and
do not constitute the statutory accounts for that year. Those accounts have
been delivered to the Registrar of Companies and included the Report of the
Independent Auditors, which was unqualified and did not include a statement
under section 498 of the Companies Act 2006.
By order of the Board
Invesco Asset Management Limited
Company Secretary
18 August 2011
END
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