Annual report: Period Ended 31 December 2012 - Invesco Perpetual

City Merchants High Yield Trust Limited 21
gain synthetic exposure to a particular investment position where this can be done more effectively
or efficiently through the use of derivatives than through investment in physical securities or to
transfer risk or obtain protection from a particular type of risk which might attach to portfolio
investments.
The Company may hedge against exposure to changes in currency rates to the full extent of any such
exposure.
Gearing
The Company’s gearing policy is determined by the Board. The level of gearing may be varied from
time to time in the light of prevailing circumstances subject to a maximum of 30% of the Company’s
total assets at any time.
Performance
The Board reviews performance by reference to a number of Key Performance Indicators which
include the following:
– Asset Performance
– Dividends
– Premium/Discount
– Ongoing Charges Ratio
Asset Performance
As the Company’s objective is to achieve both high income and capital growth, the performance is
best measured in terms of total return. There is no stock market index against which the Company’s
performance may be measured with any degree of relevance. Therefore, the Board makes reference
to the total return of the FTSE Government Securities – All Stocks Index and the FTSE All-Share Index
as well as peer group data when discussing shareholders’ returns.
The Company’s total return per ordinary share over the period from 2 April 2012 to 31 December
2012 was 13.2% compared with a total return of 4.5% for the FTSE Government Securities – All
Stocks Index and 5.8% for the FTSE All-Share Index. The terms of the reconstruction allow direct
comparison of the Company’s financial information with that of City Merchants High Yield Trust plc
(CMHYT plc) so it is also appropriate to combine the information from both over the 12 months to
31 December 2012 in order to see representative performance over a full year. The combined total
return per ordinary share over the 12 months to 31 December 2012 was a 24.5% compared with a
total return of 2.7% for the FTSE Government Securities – All Stocks Index and 12.3% for the FTSE
All-Share Index.
Dividends
Dividends form a key component of the total return to shareholders. The following interim dividends
have been paid to shareholders in respect of the year to 31 December 2012:
Dividend
To Shareholders
per Share Date Paid Registered on
2.4p* 28 March 2012 9 March 2012
2.6p 24 August 2012 27 July 2012
2.5p 30 November 2012 26 October 2012
2.5p 28 February 2013 8 February 2013
* Special interim dividend paid by City Merchants High Yield Trust plc.
Premium/Discount
The Board monitors the price of the shares in relation to their net asset value and the premium/
discount at which the Company’s shares trade. During the period from 2 April to 31 December 2012,
the share price varied from a premium of 5.5% to a discount of 5.9%. In the previous three months