Annual report: Period Ended 31 December 2012 - Invesco Perpetual

4 City Merchants High Yield Trust Limited
Chairman’s Statement
My statement in the 2011 annual report of City
Merchants High Yield Trust plc (CMHYT plc) set
out proposals for the transfer of the assets of that
company to City Merchants High Yield Trust
Limited (the ‘new Company’), a Jersey resident
company, in exchange for shares. These
proposals were intended to enable the continued
delivery of tax efficient investment returns to
shareholders from high-yielding fixed-interest
securities and put shareholders in a position
equivalent to previous years, by increasing the
net distributable income as compared with that
achievable had CMHYT plc continued. These
proposals were implemented on 2 April 2012
and I am pleased to report that the new
Company is operating satisfactorily.
The terms of the re-domicile allow direct
comparison of the new Company’s financial
information from 2 April 2012 with CMHYT
plc’s financial information prior to that date. In
the 12 months to 31 December 2012, the total
NAV return was 24.5% which compares
favourably with the average return of 12.4%
from the funds in the Investment Management
Association Sterling Strategic Bond sector.
Disappointingly the total return on the
Company’s share price did not match the NAV
return as the shares were quoted at a discount to
NAV for most of 2012. The Board keeps the
discount under review. Some share price
volatility is to be expected under current market
conditions and we would expect the Company’s
discount to reduce from its current level.
An analysis of the total and capital returns for
CMHYT plc and the new Company is shown
in the performance statistics on page 2 and a
summary of the market background and
investment strategy followed in the year are set
out in the Manager’s Investment Report
following my statement. Also, an unaudited
statement of comprehensive income is included
on page 57 showing the respective
contributions of CMHYT plc and the new
Company over the 12 months to 31 December
2012.
The new Company continues to produce an
attractive level of income for shareholders and
I am pleased to report that your Board has been
able to meet its target, as set out in the
prospectus dated 23 February 2012, of declaring
aggregate dividends of 10p per share in respect
of the year to 31 December 2012. This
comprised a special dividend paid by CMHYT
plc in March 2012 and interim dividends of
2.6p, 2.5p and 2.5p paid by the new Company
in August 2012, November 2012 and February
2013, respectively. The Board continues to target
total dividends at the same level for the current
year.
The Board believes the portfolio remains
well-positioned to continue to provide
opportunities for modest growth while producing
an attractive level of income for shareholders.
Annual General Meeting (AGM)
The AGM will be held at the offices of R&H
Fund Services (Jersey) Limited, Ordnance House,
31 Pier Road, St. Helier, Jersey JE4 8PW, at
10.30 am on 13 June 2013. All of the resolutions
are summarised on pages 34 and 35. Since this
is the first AGM of the new Company, all of the
Directors will submit themselves for election by
shareholders. In addition to this, and the usual
ordinary resolutions to receive this annual report
and re-elect the auditor, there are four items of
special business as follows:
1. Continuation of the Company (ordinary
resolution 8)
The Articles of Association require that an
ordinary resolution to continue the Company be
put to shareholders each year.
2. Issuance of New Shares
Although Jersey law does not require shareholder
approval for issues of shares, the Directors
expressed an intention in the new Company’s
prospectus to request that the authority to allot
shares for cash on a non-pre-emptive basis is
renewed at each AGM. Special Resolution 9
accordingly seeks to renew the Directors’