Annual Financial Report - year ended 30 June 2026
Summary by AI BETAClose X
City Natural Resources Growth and Income PLC (the "Company")
Annual Financial Report for the year ended 30 June 2026
This announcement contains regulated information
The statements below are extracted from the Company's Annual Report for the year ended 30 June 2026 (the "Annual Report"). The Annual Report, which includes the notice of the Company's forthcoming annual general meeting, will be posted to shareholders at the beginning of November 2026. Members of the public may obtain copies from Frostrow Capital LLP, 25 Southampton Buildings, London WC2A 1AL or from the Company's website at https://citynats.com/ where up to date information on the Company, including daily NAV, share prices and fact sheets, can also be found.
The Annual Report will be submitted to the Financial Conduct Authority and will shortly be available in full, unedited text for inspection on the National Storage Mechanism (NSM): https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Full year highlights
- Net asset value (“NAV”) per share total return of 76.6%, outperforming the MSCI World Metals and Mining Index (63.5%) and MSCI World Energy Index (34.1%).
- Share price total return of 87.0% (2025: 9.3%).
- Dividend yield of 8.3% at the year end, comprising four interim dividends totalling 28.30p per share in respect of the year (2025: 8.03p per share).
- Issuance of 2,150,000 shares from treasury during the year during periods of demand-driven sustained share price premium to NAV. Discount to NAV of 1.2% at year-end (June 2025: 6.1%).
Post-period end events
- Issuance of a further 3,965,000 shares from treasury to satisfy investor demand following the year end.
- The Company changed its name to City Natural Resources Growth & Income PLC with effect from 15 September 2026.
- Tufton became the Company’s Investment Manager, and Keith Watson and Robert Crayfourd resumed responsibility for the Company’s portfolio.
- First interim dividend (2027) of 7.88p per share declared in October 2026.
Investment highlights
- Strong performance driven principally by the Company’s exposure to the precious metals rally, with profits subsequently taken and reallocated towards energy as the geopolitical backdrop evolved.
- Increased exposure to oil and gas, shipping and related energy sectors, which benefited from disruption in the Middle East.
- Positive outlook for natural resources, supported by geopolitical uncertainty, energy security and increasing demand for energy and critical materials associated with AI and data-centre growth.
Our Objective
To provide shareholders with capital growth and income predominantly from a portfolio of mining and resource equities and of mining, resource and industrial fixed interest securities.
Key Metrics
for the year ended 30 June:
|
Net asset value total return1 |
Share price total return1 |
||
|
2026 |
2025 |
2026 |
2025 |
|
76.6% |
4.6% |
87.0% |
9.3% |
|
|
|
||
|
MSCI World Metals and Mining Index total return (sterling adjusted)2 |
MSCI World Energy Index total return (sterling adjusted)2 |
||
|
2026 |
2025 |
2026 |
2025 |
|
63.5% |
(4.5)% |
34.1% |
(7.7)% |
|
|
|
||
|
Dividend yield1 |
Dividend per share (pence) |
||
|
2026 |
2025 |
2026 |
2025 |
|
8.3% |
4.0% |
28.30p |
8.03p |
Total return performance (cumulative)
|
|
|
|
|
Since |
|
|
1 Year |
3 Years |
5 Years |
inception* |
|
Net asset value per share |
76.6% |
98.2% |
147.5% |
1,273.6% |
|
Share price |
87.0% |
139.5% |
169.4% |
1,440.5% |
|
MSCI World Metals and Mining Index (sterling adjusted)2 |
63.5% |
68.4% |
102.5% |
843.3% |
|
MSCI World Energy Index (sterling adjusted)2 |
34.1% |
45.3% |
139.6% |
694.7% |
* 31 July 2003.
1 Alternative Performance Measure (“APM”). A glossary of the terms used, including alternative performance measures, can be found below.
2 Used by the Company as a comparator, not a benchmark. As at 30 June 2026, 48.3% of the portfolio was attributable to the MSCI World Metals and Mining Index and 49.8% of the portfolio to the MSCI World Energy Index. Please refer to the ‘by commodity’ data below for further detail.
Performance Record
|
|
|
Year ended |
Year ended |
|
Total Return |
|
30 June 2026 |
30 June 2025 |
|
Net asset value per share1 |
|
76.6% |
4.6% |
|
Share price (mid market)1 |
|
87.0% |
9.3% |
|
MSCI World Metals and Mining Index (sterling adjusted)2 |
|
63.5% |
(4.5)% |
|
MSCI World Energy Index (sterling adjusted)2 |
|
34.1% |
(7.7)% |
|
|
As at |
As at |
|
Capital Values |
30 June 2026 |
30 June 2025 |
|
Net asset value per share |
347.19p |
212.56p |
|
Share price (mid market) |
343.00p |
199.50p |
|
Share price discount to NAV per share1 |
1.2% |
6.1% |
|
Net gearing1 |
10.9% |
4.8% |
|
|
Year ended |
Year ended |
|
Revenue Earnings and Dividends |
30 June 2026 |
30 June 2025 |
|
Earnings per share |
1.02p |
0.00p |
|
Dividends per share |
28.30p |
8.03p |
|
Dividend yield1 |
8.3% |
4.0% |
|
Ongoing charges ratio1 |
1.7% |
2.0% |
1 Alternative Performance Measure (“APM”). A glossary of the terms used, including alternative performance measures, can be found below.
2 Used by the Company as a comparator, not a benchmark. As at 30 June 2026, 48.3% of the portfolio was attributable to the MSCI World Metals and Mining Index and 49.8% of the portfolio to the MSCI World Energy Index. Please refer to the ‘by commodity’ data below for further detail.
|
Highs and Lows during the year ended 30 June 2026 |
Highest |
Lowest |
|
Net asset value per share |
457.03p |
210.39p |
|
Share price (mid market) |
444.00p |
202.50p |
|
Share price premium/(discount) to NAV per share range (positive = premium) |
5.6% |
(14.9)% |
|
|
Dividend |
|
|
|
|
Dividend History |
per share |
Ex-dividend date |
Record date |
Payment date |
|
Fourth interim dividend 2026 |
6.94p |
23 July 2026 |
24 July 2026 |
28 August 2026 |
|
Third interim dividend 2026 |
8.34p |
30 April 2026 |
1 May 2026 |
29 May 2026 |
|
Second interim dividend 2026 |
7.00p |
5 February 2026 |
6 February 2026 |
27 February 2026 |
|
First interim dividend 2026 |
6.02p |
30 October 2025 |
31 October 2025 |
28 November 2025 |
|
Total for year ended 30 June 2026 |
28.30p |
|
|
|
|
Fourth interim dividend 2025 |
4.25p |
31 July 2025 |
1 August 2025 |
1 September 2025 |
|
Third interim dividend 2025 |
1.26p |
1 May 2025 |
2 May 2025 |
30 May 2025 |
|
Second interim dividend 2025 |
1.26p |
30 January 2025 |
31 January 2025 |
28 February 2025 |
|
First interim dividend 2025 |
1.26p |
24 October 2024 |
25 October 2024 |
22 November 2024 |
|
Total for year ended 30 June 2025 |
8.03p |
|
|
|
Chairman’s Statement
Global macro themes continue to drive interest in natural resources which was reflected in the outperformance of the Company and a total return in NAV per share of 76.6%.
Overview
I am sure shareholders will agree it has been an eventful year, not only for the underlying markets that the Company invests in, but also for the Company itself. I am pleased to say, after much hard work in the background, the transfer of the investment management mandate to Tufton Investment Management was completed after the financial year end, along with a new name to reflect the change.
As part of this, we have been reunited with long standing fund managers, Keith Watson and Robert Crayfourd, who for the past 11 years have demonstrated their abilities with exceptional returns and an ability to foresee changes in underlying themes and make the necessary adjustments ahead of the broader market.
I must emphasise the move to Tufton is not a sea change for the Company. Our investment strategy remains unchanged. We believe Tufton is an organisation that will provide the support, industry knowledge and market intelligence required to create lasting shareholder value.
This access to information, knowledge and experience is of paramount importance when making investment decisions for an active manager in the commodities, energy and shipping space.
With the volatility experienced in commodity markets this year, influenced by factors such as the Iran conflict, ongoing protectionist measures and existing themes such as electrification and AI data centre rollout, the ability to see through the noise and take advantage of opportunities has never been more important.
These global macro themes have amplified focus and interest in commodities by the general public, governments and investors, and this Company, with its active management, we believe is one of the best ways to take advantage of this.
This has been reflected in the Company’s net asset value (“NAV”) per share total return of 76.6% over the 12 month period, outperforming its performance comparators, the MSCI World Metals and Mining Index, which returned 63.5%, and the MSCI World Energy Index, which returned 34.1% (both sterling adjusted).
Company activity over the year
Together with the commentary which follows, I would again like to draw shareholders’ attention to the timeline of events set out on page 8 of the Annual Report which I hope is helpful in aiding an understanding of the various matters which have developed during the Company’s financial year and to date.
The Company’s financial year began with the announcement of the result of the Tender Offer on 1 July 2025. A total of 29,334,059 shares, representing 45.72% of the shares in issue at the time (excluding shares held in treasury) were tendered. In September 2025, the Tender Offer was concluded and resulted in a Tender Price of 208.33 pence per share for those exiting shareholders.
Around the same time, the Company’s shares began to trade at a premium to NAV. As I noted in the Company’s half year report, we believe that the value-enhancing initiatives (including the enhanced dividend yield and reduced management fee) and the strong performance of the portfolio led to improved investor sentiment and the increased demand for the Company’s shares.
Despite the significant reduction in the Company’s net assets on completion of the Tender Offer, the strong performance of the portfolio, particularly in the first half of the year, meant that during the year the Company’s NAV reached the pre-Tender Offer level. However, towards the end of the financial year it dipped back, before recovering in the period to date. The graph on page 7 of the Annual Report illustrates the effect of the Tender Offer and the strong performance of the portfolio on the Company’s NAV over the financial year to 30 June 2026 and beyond.
A General Meeting was held on 2 March 2026, and the Board was pleased that shareholders voted in favour of the two proposed resolutions permitting the Company to issue in aggregate up to 20 per cent. of its issued share capital (excluding shares held in treasury) as at the date of the General Meeting. If the Board had not taken steps to renew the Company’s authority to issue shares, the share issuance authority routinely approved by shareholders at the last annual general meeting (“AGM”) held on 9 December 2025 would have been exhausted in mid-August 2026 and been insufficient to allow the Company to satisfy demand for its shares during the period up to the next AGM in December 2026.
In early March 2026, the Company announced that it had been informed that its named portfolio managers, Keith Watson and Robert Crayfourd, had tendered their resignations to the Company’s investment manager at the time, CQS (UK) LLP, part of the Manulife group (“CQS”). Later in March 2026, the Company announced that it had served six months’ protective notice to CQS. Shortly after, Tufton Investment Management Ltd (“Tufton”) announced that Keith and Robert would be joining as employees as soon as their contractual arrangements allowed them to do so.
Following a period of handover during Keith and Robert’s notice periods, senior Manulife Investment Management Group portfolio managers, Craig Bethune and Diana Racanelli, assumed responsibility for the management of the portfolio in May 2026. There was no change to the Company’s investment process, strategy or operations.
Following the resignations, the Board considered the options available to the Company to move forward in the best interests of shareholders. These options included remaining with CQS or appointing a new investment manager, so the Board conducted an evaluation of possible investment management groups with expertise and a proven track record of performance in the natural resources sector. The Board engaged in a number of discussions with investment management firms (including but not exclusively, CQS and Tufton), received presentations from a shortlist of firms, conducted the necessary due diligence and took into account the learnings and results of its wide-ranging strategic review in 2025. The Board concluded that the appointment of Tufton as investment manager, and the ongoing stewardship of the portfolio by Keith and Robert, was in the best interests of shareholders.
The Company announced on 27 May 2026 that Heads of Terms had been agreed to appoint Tufton as investment manager and alternative investment fund manager with effect from 14 September 2026, with Keith and Robert to resume as the Company’s portfolio managers at that time. The Company shall pay Tufton an annual management fee of 1 per cent. per annum of the NAV of the Company, calculated monthly and payable monthly in arrears. This is in line with the reduced management fee introduced in May 2025.
In June, the Company also received notice from BNP Paribas S.A., London Branch (“BNP”) of its intention to terminate its agreements to provide depositary and custody services. In addition, BNP gave notice that it would cease the provision of a lending facility to the Company. Aided by its advisers, the Board commenced a review of alternative service providers and, following thorough review and negotiation, resolved to appoint Apex Depositary (UK) Limited (“Apex”) as the Company’s depositary and European Depositary Bank SA, Dublin Branch (“EDB”) as the custodian (sub-contracted to Citibank N.A., London Branch) with effect from 14 September 2026, and The Bank of Nova Scotia, London Branch (“Scotiabank”) as lender with effect from 11 September 2026. Further detail on the Company’s borrowing arrangements can be found within Note 12 to the Financial Statements.
Performance and Returns
During the year to 30 June 2026, the Company’s NAV per share total return was 76.6%, outperforming the total return of 63.5% of its performance comparator, the MSCI World Metals and Mining Index (sterling adjusted), to which 48.3% of the Company’s portfolio (as at 30 June 2026) can be attributed. The Company similarly outperformed the total return of 34.1% of the MSCI World Energy Index (sterling adjusted), the sector to which the Company’s portfolio has a greater relative exposure (49.8% as at 30 June 2026).
Performance during the year can largely be attributed to the exposure of the Company’s portfolio to the precious metals rally which was driven by geopolitical uncertainty and a return to safe haven assets.
However, in the second half of the year, Keith and Robert took a conscious decision to re-weight the portfolio in response to the evolving geopolitical situation in the Middle East, which they believed warranted a higher energy risk premium. As a result, profits derived from the portfolio’s precious metals exposure were used to fund this reallocation into energy.
The Company’s share price total return over the year was 87.0%, with the share price increasing from 205.00 pence on 1 July 2025 to 343.00 pence as at 30 June 2026. The Company’s share price during the year peaked at 440.00 pence on 27 February 2026, before falling sharply over the following weeks in response to the initiation of the US and Israeli attacks on Iran and fall in precious metals prices.
As at 23 October 2026, the latest practicable date prior to the publication of this Report, the Company’s share price had reached 376.50 pence.
Management of Premium/Discount
The Board recognises the importance to shareholders of managing the premium or discount of the Company’s share price relative to the NAV per share. Bearing in mind the underlying volatility of the markets in which the Company invests, the Board has determined to use share buybacks with the aim of maintaining a single digit discount to the Company’s NAV per share in normal market conditions.
During the year the Company bought back a total of 30,097,420 shares, however, a significant portion of this relates to the Tender Offer, pursuant to which 20,534,059 shares were bought back for cancellation and 8,800,000 shares were bought back to be held in treasury. This means that only 763,361 shares were bought back in the ordinary course of share price discount management. Those shares were bought back at an average price of 346.63 pence per share and discount to NAV of 9.9%.
With periods of sustained premium driven by demand during the year, the Company was able to sell a total of 2,150,000 shares from treasury at an average price of 379.04 pence per share.
As at 30 June 2026, the Company had 36,210,418 shares in issue (excluding 10,144,032 shares held in treasury) and the discount to NAV was 1.2%. Over the year the discount averaged 3.6%, compared with 8% over the course of the previous financial year.
Gearing
As at the year end, gearing was 10.9%, compared with 4.8% at the beginning of the year. The increase reflects both an additional draw down under the borrowing facility, enabling the portfolio managers to take advantage of market opportunities presented by geopolitical events at the beginning of March 2026, and a reduction in net assets following completion of the Tender Offer.
Dividends
In July 2025, the Company declared a fourth interim dividend (2025) of 4.25 pence per share, the first following the adoption of an enhanced dividend policy to distribute circa. 8 per cent. of the Company’s NAV via a quarterly dividend of 2 per cent. of the preceding quarter-end NAV per share.
Since then, the Company has declared interim dividends (2026) of 6.02 pence per share; 7.00 pence per share; 8.34 pence per share; and 6.94 pence per share, a total of 28.30 pence per share in respect of the year ended 30 June 2026 (2025: 8.03 pence per share) and representing a yield of 8.3% as at the year end (2025: 4.0%). On 15 October 2026, the Company declared its first interim dividend (2027) of 7.88 pence per share to shareholders on the register on 30 October 2026 and which will be payable on 30 November 2026.
Because the dividend is linked to the Company’s NAV rather than being set at a fixed pence per share, the amount paid per share may rise or fall over time. Therefore, if the Company’s NAV declines, shareholders should expect the dividend in pence per share to reduce correspondingly. This mechanism helps ensure that distributions remain aligned with the Company’s NAV and are sustainable over the longer term.
Post reporting period update
Since the year end, in early July 2026, a further 37,180 shares have been bought back into treasury at an average price of 325.09 pence per share and discount to NAV of 8.9%.
Since 3 August 2026, the Company’s shares once again began to trade at a premium to NAV and the Company has sold a further 3,965,000 shares from treasury at an average share price of 391 pence. As at 23 October 2026, the latest practicable date prior to the publication of this Report, the number of shares held in treasury had reduced to 6,216,212, increasing the number of shares with voting rights since the period end to 40,138,238.
In preparation for the change in Investment Manager, on 8 September 2026, the Company held a General Meeting where shareholders approved an amendment to the Company’s Articles of Association (“Articles”) which permitted the directors of the Company to determine the name of the Company. The Board of Directors resolved to change the name of the Company from CQS Natural Resources Growth and Income PLC to City Natural Resources Growth and Income PLC, and this change took effect on 15 September 2026.
On 14 September 2026, Tufton took over from CQS as the Company’s investment manager, and we as a Board very much look forward to continuing to build a productive relationship with the team there.
My fellow directors and I would like to thank Craig Bethune and Diana Racanelli at Manulife Investment Management for their professionalism and responsible stewardship during their interim management of the Company’s portfolio, as well as all involved at CQS throughout the business’ tenure as the Company’s investment manager.
Board of Directors
Carole Cable, having served nine years as a director, will not be seeking re-election and will retire as a Director of the Board at the conclusion of the AGM in December 2026. This is in line with best practice corporate governance. Carole has made an outstanding contribution to the Board during her tenure, bringing a wealth of experience, sound judgement and unwavering commitment to the Company and its shareholders. She has always strived to ensure the best possible communication and engagement with the Company’s shareholders in both routine and challenging circumstances. On behalf of my fellow directors and all shareholders, I would like to express our sincere gratitude to Carole for her dedication to the Company over her tenure and wish her every success for the future.
As previously communicated, I intend to continue to serve as Chairman and will therefore stand for re-election by shareholders at the forthcoming AGM. In 2025, the Nomination Committee assessed the impact of the simultaneous retirement of both Carole and me following our respective nine year tenures. The Committee concluded that a staggered retirement would be in the interests of orderly succession and facilitate continuity and stability of the Board. In light of the developments of recent years, including the changes outlined earlier in this report to the Company’s investment manager and other key service providers, the Board believes that stability and continuity of leadership remain a priority.
As part of its succession planning in 2026, the Nomination Committee has concluded that the Company and its shareholders would be best served by asking me to remain as Chairman for a further year until the AGM to be held in 2028. This will enable the consideration and development of possible candidates on the Board to succeed me as Chair and, in due course, the commencement of a search process to identify and recruit a new non-executive director with the skills the Board has identified that it requires. The Nomination Committee does not consider that my serving on the Board for more than nine years from the date of first appointment impacts my independence as a non-executive director.
Annual General Meeting
The AGM will be held at One Fleet Place, London, EC4M 7RA at 12 noon on 1 December 2026. The business of the AGM is summarised in the Directors’ Report on pages 41 and 42 and the Notice of Meeting beginning on page 87 of the Annual Report.
Auditor
During the year the Audit Committee led a competitive audit tender process, which resulted in the recommendation that PricewaterhouseCoopers LLP be appointed as the Company’s new auditor for the year ending 30 June 2027. Further information concerning the audit tender process can be found within the Report of the Audit Committee on page 54 of the Annual Report, but I would like to take this opportunity to express the Board’s thanks to BDO LLP for its service to the Company as auditor since 2017.
Articles of Association
The Directors are proposing amendments to the Company’s Articles of Association to enhance transparency and strengthen governance. It is the Directors’ belief that these amendments are in the best interests of shareholders as a whole.
Your attention is drawn to Resolution 15 within the Notice of Annual General Meeting beginning on page 87 of the Annual Report, as well as the Appendix – Summary of the Principal Amendments to the Company’s Articles of Association on page 93.
Voting and Q&A
The Board encourages all shareholders to exercise their right to vote at the AGM and, where possible, to do so online in advance. Registering your vote in advance will not restrict you from attending and voting at the meeting in person should you wish to do so. The Board recommends that shareholders vote in favour of all resolutions as each of the Directors intends to do in respect of their own shares.
As well as the formal proceedings, this will be an opportunity to meet the Board and to receive a presentation from our portfolio managers and we hope as many shareholders as possible will attend. Shareholders can submit questions in advance by writing to the Company Secretary, Frostrow Capital LLP (“Frostrow”), at cosec@frostrow.com.
Outlook
While the geopolitical backdrop is likely to remain volatile, the Board shares the portfolio managers’ positive outlook and is confident that, through active, specialist management, the Company is well placed to navigate the uncertainty and take advantage of the opportunities emerging across natural resources markets. The appointment of Tufton as Investment Manager is already bringing complementary expertise and resources, and the Board looks forward to the Company benefiting further from these synergies.
Christopher Casey
Chairman
27 October 2026
Investment Manager’s Review
The outlook for the sector remains positive. Real assets and real returns are highly attractive in the current high inflation environment, and volatile commodity markets provide opportunities for active management of the Company's portfolio.
Overview and Performance as at 30 June 2026
We are delighted to report another strong year of performance for the Company with a NAV total return of 76.6% and a share price total return of 87.0% in the 12 months to 30 June 2026. While the Company has no formal benchmark, we do track our performance against the MSCI World Metals and Mining and the MSCI World Energy indices which, over the same period, returned gains of 63.5% and 34.1% respectively, on a sterling adjusted basis.
The financial year was marked by a period of significant macro volatility, driven not least by a more aggressive US trade policy, including the implementation of tariffs and a general shift to upending global trade flows. The ongoing war in Ukraine disrupted energy flows as OPEC focused on regaining share. From early July 2025 to the end of February 2026, strength in precious metals triggered a lift in metals prices across the board, with gold and silver the standouts. The US-Iran conflict, which began on 28 February 2026, marked the high point for precious metal prices, which subsequently fell sharply throughout the remaining months of the financial year. Gold, however, ended the financial year about 20% higher year-on-year, and silver gained an even more impressive c.63%, having finally caught up after years of underperformance compared with gold.
The Company’s large weighting to precious metals was the primary driver of outperformance during the year under review. In early 2026, the Company took some profits from its gold and silver holdings and reallocated the proceeds towards the energy sector, reflecting the view that the evolving geopolitical situation in the Middle East warranted a higher energy risk premium. This helped sustain performance over the full year. Alongside profit taking, gearing was reduced to lower risk and to retain flexibility to act more opportunistically should market volatility present further opportunities.
The graph on page 12 of the Annual Report shows how the major sectors in the portfolio have moved over the last year and further details are set out in the sections that follow.
Precious Metals (Gold/Silver): 38.7% of the portfolio
The first half of the financial year and the early part of 2026 marked continued record-setting all-time highs for precious metals. The gold price stood at US$3,339 per ounce at the start of the financial year on 1 July 2025 and rose rapidly throughout the second half of 2025, reaching US$5,417 per ounce at the end of January 2026 – a gain of 62.3%. The gold price subsequently fell back to US$4,008 per ounce by 30 June 2026, but this still represented a 20.0% increase over the financial year as a whole. Silver was even more volatile, having started the financial year at US$36.0 per ounce, it rose throughout the second half of 2025 and into January 2026, reaching an astonishing price of US$116.7 per ounce – a gain of 219.3%. The silver price subsequently fell back to US$58.6 per ounce by 30 June 2026, which represented an impressive 62.6% increase over our financial year.
These price rises up to January 2026 were driven by increasing investor concerns around US dollar currency debasement risks amid elevated US government debt levels, expectations of future Federal Reserve rate cuts, and President Trump's comments suggesting indifference to dollar volatility, all of which supported a return to precious metals as a safe haven. Central bank gold purchases continued, and physical exchange-traded funds also contributed to this positive momentum. The silver rally followed five consecutive years of supply deficits, as highlighted by the Silver Institute, and was exacerbated by China’s decision to restrict exports of refined silver given its strategic importance for the high tech and defence industries.
As the US-Iran conflict escalated in March 2026, gold and silver saw a heavy sell off with liquidity-driven deleveraging in response to uncertainty, a stronger US dollar, and surging real bond yields increasing the opportunity cost of holding non-yielding assets. This sharp sell-off occurred despite strong macroeconomic tailwinds from elevated geopolitical tensions and inflation fears. Although prices have cooled from the January 2026 peak, they remain higher than a year ago and continue to be supported by global inflation fears stemming from the ongoing conflict and higher oil prices, strong retail demand, and concern about the future of the US dollar.
The Company’s exposure to the precious metals sector is our largest weighting at almost 39% of the portfolio as at 30 June 2026. Among our larger positions, the standout performers over the year were Greatland Resources (+43.9%), an Australian gold and copper producer; Predictive Discovery (+87.0%), a West African gold producer; and Emerald Resources, a Cambodian gold producer (+35.5%). Just outside of the top 10 holdings we also saw good returns from Ora Banda Mining and Equinox Gold.
We took profits in early 2026, selling around 15% of net assets in the form of gold and silver companies to lock in gains for the year and reinvested the proceeds into energy companies. This reallocation proved beneficial to the Company’s overall performance.
Energy (Oil and Gas/Rigs/Shipping): 34.7% of the portfolio
The conflict involving the US and Iran dominated news flow throughout the latter part of the Company’s financial year and introduced heightened geopolitical uncertainty for commodity markets. The key outcome for markets has been disruption to energy supply routes, most notably through the Strait of Hormuz, with the loss of approximately 13 million barrels per day (MMb/d) of oil supply, a material reduction in global liquefied natural gas flows, and disruption to other energy linked industrial inputs, including sulphuric acid used in fertiliser production and metal processing. These developments may have implications beyond inflation over the coming months, increasing downside risks to global growth and requiring a more balanced approach to central bank interest rate policy.
The Brent oil price was initially a clear beneficiary of the ongoing conflict, benefiting the Company’s increased oil and gas, shipping and refining weighting. Having traded for most of the Company’s financial year between US$60 and US$70 per barrel it rose to a high of US$117 per barrel at the end of March 2026. The oil price then whipsawed throughout the April to June 2026 period as optimism sparked by seemingly weekly announcements of a potential US-Iran peace agreement was repeatedly offset by headlines pointing to continued conflict or delays in reaching a deal. Each additional day of conflict weighs further on global production and accelerates inventory depletion.
With oil exports through the Strait of Hormuz having been impacted since the end of February 2026, the full extent of the supply loss will become more evident over time, adding an increased risk premium should it be resolved, despite mitigation efforts such as the US administration releasing a proportion of its Strategic Petroleum Reserve. Oil reacted swiftly to the signing of the Memorandum of Understanding between Iran and the US, falling sharply in June 2026 to just over US$70 per barrel even as attacks continued between the US and Iran during the ceasefire.
US shale supply growth has slowed due to sector consolidation, lower prices and a decrease in drilling activity. The oil and gas producers have been slower to respond to higher prices, preferring to return free cash flow to investors via buybacks and dividends than investing in growth.
On the demand side, growth continues primarily coming from countries like India and other emerging markets. While China has hit peak demographics with its population in decline, global electric vehicle sales are increasing, including in heavy vehicles which is likely to see Chinese oil demand soften but be partially offset from growing chemicals production.
The shipping exposure was also a notable beneficiary of Middle Eastern disruption, following the loss of around 13MMb/d of oil transiting the Strait of Hormuz, with further disruptions to the Red Sea from Houthi attacks on vessels, causing chaos to global shipping routes. This increased the days required to ship oil and liquefied petroleum gas cargoes whilst increasing regional price differentials, which boosted day rates and thus earnings for holdings in the portfolio, such as Frontline (+51%) and BW LPG (+45%).
Product markets such as diesel and gasoline continued to enjoy robust refining margins. Physical damage to refining assets within OPEC from Iranian attacks and Russia from Ukrainian drone attacks has constrained supply, while real-world demand for oil products remained resilient despite the International Energy Agency’s cautionary outlook. Our view is that the market has removed practically all conflict-related risk and is underestimating the prospects of continued conflict.
The Company increased its weighting to oil and gas through early 2026, with further exposure weighted towards gas, offshore rigs and shipping companies. We saw good performance from the energy names such as Tamboran Resources (+50.0%), an Australian natural gas explorer and producer and Spartan Delta (+198.3%), a Canadian energy company. In the ancillary sectors in the energy space, two of these stocks produced excellent returns: BW LPG (+72.0%), the world’s largest independent LPG shipper and Transocean (+95.4%), an international provider of offshore drill rigs. The Company’s holdings in the refining sector also provided strong returns with record refining margins due to the Iran and Ukraine conflicts.
Uranium: 11.1% of the portfolio
The uranium market continues to be well-supported, driven by rising electricity demand required to power AI data centres, coupled with energy and national security concerns, and a desire for a carbon-free energy source capable of providing reliable baseload power.
On the supply side, industry sources such as the World Nuclear Association forecast a global uranium deficit by 2035 owing to operational hurdles from current production in Kazakhstan and Canada and the long lead times needed to build primary uranium mines. Notably, these market forecasts still include uranium supply from projects currently being developed by NexGen and Denison Mines. This supply/demand dynamic has seen the spot price and term price, a level contracted by utilities, push up close to $100/lb, yet this is still having little noticeable impact on incentivising further production growth.
AI data centre growth is adding a new and significant driver of power demand growth, with numerous previously closed reactors in the process of restarting, backed by the hyperscalers. These include Microsoft signing a 20-year Power Purchase Agreement (“PPA”) with US utility business, Constellation, for the restart of the Three Mile Island reactor in the US and Meta signing a 20 year PPA for Constellation’s Clinton Clean Energy Centre. Meanwhile, Google and Amazon are each partnering with two different Small Modular Reactor (“SMR”) developers.
SMRs are advancing in their development and may prove a significant incremental demand driver from the mid-2030s, which sounds long dated, but this will require additional U3O8 contracting from as early as 2028, with some reports suggesting the hyperscalers are exploring market opportunities to secure future supply.
The Company’s largest exposure to uranium is through NexGen Energy (+26.3%), an emerging uranium producer in the Athabasca Basin in Canada which received final permits in March 2026 and has now begun construction with first uranium production targeted for 2030 from its Rook I asset. Along with smaller scale projects such as Denison’s Wheeler River project, this additional production is crucial to addressing the current market supply deficit. Despite taking some profits in Q1 2026, after a strong period of price appreciation, NexGen Energy nevertheless remains one of the Company’s largest positions.
Base Metals (Copper): 7.3% of the portfolio
Over the year, the portfolio has remained at a low weighting towards base metals such as copper, aluminium, nickel, and tin. While the longer-term outlook for exposure to these metals remains attractive, nearer-term caution appears warranted, with high energy prices acting as a drag on industrial demand and valuations, especially for copper producers. In our view, the valuations look more inflated relative to the energy or precious metal miners, which has been primarily driven by increased inflow of generalist money seeking exposure to the proposed AI data centre build out.
Furthermore, US copper exchange warehouse inventories have risen to an all-time high, equivalent to over six months of the region’s annual consumption, driven by expectations that US tariffs will create a premium for US metal - a dynamic we believe is distinct from real end demand, and one that will ultimately unwind as supply returns to the broader market. As a result, this build up may act as an overhang to metal prices and could contribute significantly to sector volatility.
We have, however, maintained some base metal exposure in high quality companies where we have seen more attractive valuations. This includes development stage plays such as Talon Metals (copper/nickel), Metals X (tin) and Solaris Resources (copper) whose assets have the potential to grow in scale and grade. Alongside these, the Company also holds Ero Copper (copper), a producer with future production growth from its Brazilian projects. Future production from these investments may better match prospective base metal demand, while their respective valuations remain extremely appealing when set against current producers, especially the development stage projects.
Outlook
We view the outlook for the energy and natural resources sector to be positive over the next 12 months and beyond, as investment into commodities moves to the fore in an environment where access to resources is increasingly shaping investor and geopolitical thinking.
Oil and gas equities remain attractive as the disruptions in the Middle East continue, with the potential for a prolonged disruption remaining under appreciated by the broader market. With most countries around the world operating on a just-in-time basis for energy purchases, many have run down their inventory and will be looking to restock, adding incremental demand.
Refining capacity has been even more of a bottleneck than oil supply, as the loss of refining capacity in the Gulf, together with continued attacks on Russian refining facilities by Ukrainian drones has led to a structural diesel shortage. This has seen diesel crack spreads hit >$100/bbl as compared with a more normalised $25/bbl.
The shipping sector continues to benefit since the Company’s June 2026 year end, from the Strait of Hormuz disruption and Houthi attacks in the Red Sea, with day rates for Very Large Crude Carriers (“VLCCs”) reaching >$1M/d, multiples of prior all-time highs.
The defensive properties of the precious metal asset class remain attractive, notwithstanding short-term risks as policy makers grapple with interest rate policy. Central Bank demand remains strong given the preference for a shift to gold over US Treasuries to mitigate risk. Questions on US government debt affordability also lessen the appeal of US Treasuries, as the US continues to run a $2 trillion deficit, having breached the historic $40 trillion debt milestone in August 2026. This is very likely to result in more money printing and currency devaluation (loss of purchasing power) which in turn drives the attractiveness of the precious metal asset class.
The transition to an AI driven world looks set to be the fastest technological shift the world has ever seen, and commodities are essential in that capacity build out. Data centres require vast amounts of energy and critical minerals and metals that go into their construction, cooling, electrification, and grid storage batteries. With current supply constraints we will continue to look for attractive opportunities to capitalise on this macro trend.
Against this supportive backdrop for the underlying commodity prices, equity valuations remain attractive, with record earnings margins for the sector overall and strong free cash flow for the miners.
Cost pressures from higher oil prices, other input prices (such as sulfuric acid) and labour remain but the impact to the current large margins is expected to be muted. We continue to focus on miners with higher ore grades and ideally cheap grid power that we believe will protect margins.
Keith Watson and Robert Crayfourd
Tufton Investment Management Ltd
27 October 2026
Portfolio at a glance as at 30 June
By commodity
|
|
June 2026 % of total investments |
June 2025 % of total investments |
|
Precious Metals |
36.80 |
44.80 |
|
Oil & Gas |
28.90 |
13.50 |
|
Uranium |
11.10 |
14.80 |
|
Shipping |
6.20 |
7.60 |
|
Base metals* |
5.50 |
5.10 |
|
Coal |
3.80 |
1.00 |
|
Copper |
2.80 |
5.30 |
|
Lithium |
2.10 |
1.80 |
|
Palm Oil |
1.90 |
3.50 |
|
Rare Earth |
0.80 |
2.20 |
|
Diversified Metals |
0.10 |
0.10 |
|
Royalty |
0.00 |
0.40 |
* Comprises polymetallic investee companies.
By location of listing
|
|
June 2026 % of total investments |
June 2025 % of total investments |
|
Canada |
42.10 |
35.30 |
|
Australia |
20.70 |
28.20 |
|
US |
21.30 |
17.20 |
|
UK |
10.70 |
12.30 |
|
Europe |
4.20 |
5.70 |
|
Unquoted |
1.00 |
1.30 |
Investment Portfolio
as at 30 June 2026
|
|
|
Valuation |
% of total |
|
Company |
Sector |
£’000 |
investments |
|
NexGen Energy |
Uranium |
7,489 |
5.4 |
|
Tamboran Resources |
Oil & Gas |
7,209 |
5.2 |
|
Spartan Delta |
Oil & Gas |
5,717 |
4.1 |
|
Emerald Resources |
Precious Metals |
5,228 |
3.7 |
|
Greatland Gold |
Precious Metals |
4,658 |
3.3 |
|
BW LPG |
Shipping |
4,476 |
3.2 |
|
Predictive Discovery |
Precious Metals |
4,259 |
3.0 |
|
Core Natural Resources |
Coal |
3,681 |
2.6 |
|
West African Resources |
Precious Metals |
3,472 |
2.5 |
|
Transocean |
Oil & Gas |
3,390 |
2.4 |
|
Top ten investments |
|
49,579 |
35.4 |
|
Ora Banda Mining |
Precious Metals |
3,324 |
2.4 |
|
Talon Metals |
Base metals |
3,263 |
2.3 |
|
Suncor Energy |
Oil & Gas |
3,215 |
2.3 |
|
Southern Cross Gold |
Precious Metals |
3,129 |
2.2 |
|
Ur-Energy |
Uranium |
3,099 |
2.2 |
|
Equinox Gold |
Precious Metals |
3,006 |
2.1 |
|
Frontline |
Shipping |
2,968 |
2.1 |
|
G Mining |
Precious Metals |
2,794 |
2.0 |
|
Polymetals Resources |
Precious Metals |
2,667 |
1.9 |
|
REA Holdings |
Fixed interests |
2,641 |
1.9 |
|
Top twenty investments |
|
79,685 |
56.8 |
|
Tamarack Valley Energy |
Oil & Gas |
2,613 |
1.9 |
|
Goldsky Resources |
Precious Metals |
2,393 |
1.7 |
|
Cenovus Energy |
Oil & Gas |
2,365 |
1.7 |
|
Americas Gold and Silver |
Precious Metals |
2,299 |
1.6 |
|
Metals X |
Base metals |
2,279 |
1.6 |
|
Solaris Resources |
Copper |
2,260 |
1.6 |
|
Harbour Energy |
Oil & Gas |
2,255 |
1.6 |
|
Silver Mountain Resources |
Precious Metals |
2,049 |
1.5 |
|
Afentra |
Oil & Gas |
1,794 |
1.3 |
|
Diamondback Energy |
Oil & Gas |
1,775 |
1.3 |
|
Top thirty investments |
|
101,767 |
72.6 |
|
Eldorado Gold |
Precious Metals |
1,769 |
1.3 |
|
Par Pacific Holdings |
Oil & Gas |
1,689 |
1.2 |
|
Thungela Resources |
Coal |
1,680 |
1.2 |
|
Denison Mines |
Uranium |
1,648 |
1.2 |
|
Sigma Lithium Resources |
Lithium |
1,641 |
1.2 |
|
Peyto Exploration & Development |
Oil & Gas |
1,634 |
1.2 |
|
Ithaca Energy |
Oil & Gas |
1,417 |
1.0 |
|
ISOEnergy |
Uranium |
1,380 |
1.0 |
|
Cerrado Gold |
Base Metals |
1,371 |
1.0 |
|
Petrol Brasileir |
Oil & Gas |
1,218 |
0.9 |
|
Top forty investments |
|
117,214 |
83.8 |
|
Valero Energy |
Oil & Gas |
1,177 |
0.8 |
|
AbraSilver Resource |
Precious Metals |
1,138 |
0.8 |
|
Lynas Corporation |
Rare Earth |
1,096 |
0.8 |
|
Tolu Minerals |
Precious Metals |
1,088 |
0.8 |
|
Osisko Development |
Precious Metals |
1,000 |
0.7 |
|
Paladin Energy |
Uranium |
999 |
0.7 |
|
Teekay Tankers |
Oil & Gas |
979 |
0.7 |
|
Goliath Resources |
Precious Metals |
936 |
0.7 |
|
Cosa Resources |
Uranium |
900 |
0.6 |
|
Canadian Natural Resources |
Oil & Gas |
894 |
0.6 |
|
Top fifty investments |
|
127,421 |
91.0 |
|
EOG Resources |
Oil & Gas |
849 |
0.6 |
|
Vizsla Silver |
Precious Metals |
781 |
0.6 |
|
Larvotto Resources |
Precious Metals |
780 |
0.6 |
|
Collective Mining |
Base Metals |
676 |
0.5 |
|
PMET Resources |
Lithium |
666 |
0.5 |
|
Sinda |
Precious Metals |
610 |
0.4 |
|
Pan American Silver |
Precious Metals |
602 |
0.4 |
|
Ero Copper |
Copper |
601 |
0.4 |
|
Vermilion Energy |
Oil & Gas |
588 |
0.4 |
|
True North Copper |
Copper |
465 |
0.3 |
|
Top sixty investments |
|
134,039 |
95.7 |
|
Integra Resources |
Precious Metals |
462 |
0.3 |
|
Prospect Resources |
Lithium |
462 |
0.3 |
|
Castile Resources |
Base Metals |
447 |
0.3 |
|
Firefinch (unquoted) |
Precious Metals |
432 |
0.3 |
|
Greenlight Metals |
Precious Metals |
382 |
0.3 |
|
Greenheart Gold |
Precious Metals |
359 |
0.3 |
|
Golden Horse Minerals |
Precious Metals |
356 |
0.3 |
|
NorAm Drilling |
Oil & Gas |
352 |
0.3 |
|
TDG Gold |
Precious Metals |
332 |
0.2 |
|
CVW Sustainable Royalties |
Royalty |
283 |
0.2 |
|
Top seventy investments |
|
137,906 |
98.5 |
|
Central Asia Metals |
Copper |
272 |
0.2 |
|
Euronav |
Fixed interests |
262 |
0.2 |
|
Newcore Gold |
Precious Metals |
256 |
0.2 |
|
Platinum Group Metals |
Precious Metals |
241 |
0.2 |
|
Tharisa |
Precious Metals |
199 |
0.1 |
|
C3 Metals |
Precious Metals |
192 |
0.1 |
|
LI-FT Power |
Lithium |
163 |
0.1 |
|
Odyssey Gold |
Precious Metals |
150 |
0.1 |
|
Richmond Vanadium |
Base metals |
114 |
0.1 |
|
Antipa Minerals |
Precious Metals |
67 |
0.1 |
|
Top eighty investments |
|
139,822 |
99.9 |
|
Other investments |
|
105 |
0.1 |
|
Total |
|
139,927 |
100.0 |
Further details on the Company’s top ten largest holdings within its Investment Portfolio are on pages 15 to 17 of the Annual Report.
Principal Risks, Uncertainties and Mitigations
Risks are inherent in the investment process and it is important that their nature and magnitude are understood so that they can be identified and controlled to the extent possible. The Board has overall responsibility for the Company’s risk management and internal control framework and, through delegation to the Audit Committee, has established a detailed framework designed to identify and monitor the key risks to which the business is exposed with associated policies and processes devised to mitigate, to the extent possible, those risks.
A risk management process has been established to identify and assess risks, their likelihood and the possible severity of impact. For each risk identified, during the year the Audit Committee considers both the likelihood and impact of the risk and then assigns an inherent risk score. The scoring of the risk is then reconsidered once the respective key mitigations are applied, and a residual risk score is assigned.
Principal risks and mitigations are discussed regularly at Audit Committee meetings and the summarised conclusions of such meetings held during the year are set out below.
Risk trend and levels
Change in inherent risk assessment over the last financial year:
↑ Increasing → Stable ↓ Decreasing
|
Risk and trend |
Principal Risks and Uncertainties |
Controls and mitigations |
|
Investment and Strategy Risk → |
Underperformance of the Company’s portfolio resulting in loss of shareholder interest. Inappropriate investment strategy, including country and sector allocation, stock selection and the use of gearing, could lead to poor returns for shareholders. Investment objectives are not met, Company does not perform well against peers / benchmark, internal targets are not met. Loss of shareholder interest could result in reduced liquidity of the Company’s shares in the market, widening of discount and diminished ability to issue new shares and grow the Fund. |
Board and Committees A formal investment mandate and compliance monitoring framework, including independent verification of adherence to investment policy limits and restrictions and Board oversight of mandate compliance. The Board consists of experienced and competent Directors in their respective fields. The Board has appointed an investment manager with long and deep natural resources knowledge, networks and experience. The Managers understand the global trends of energy transition, digital and economic growth and energy security. The Board receives and reviews the explanation of significant asset selection decisions and the rationale for the composition of the investment portfolio provided by the investment manager at quarterly Board and interim dividend review meetings. The Company spreads investment risk over a portfolio of global resource quoted equities and fixed-interest securities and the Board regularly monitors the spread of investments to ensure that it is adequate to minimise the risk associated with specific countries or sectors. Key Service Providers The investment manager has a well-defined investment strategy and process and an investment management contract, which includes safeguards such as provision of service termination, is in place which defines their duties and responsibilities. The investment manager produces monthly factsheets, which include an investment commentary. |
|
|
|
Reports and updates on the Company’s investment portfolio, including currency exposures, and recent transactions, latest income and expense forecasts are prepared by the investment manager and Frostrow for the Board’s review at each quarterly meeting. Frostrow produces a monthly compliance report, confirming the Company’s compliance with its published Investment Policy and restrictions, or reporting any breaches or issues. The Board receives regular reporting from the Company’s brokers on shareholder composition and activity, including review of the shareholder register and key movements, to identify emerging concentration risks, changes in investor behaviour or negative trends. |
|
Market, Sector and Geopolitical Risk ↑ |
By the nature of its investing activities, the Company’s portfolio is exposed to fluctuations in market prices (both individual security prices and foreign exchange) and risks associated with the specific sectors in which its portfolio companies operate, such as inflation, interest rates, commodity and energy prices. Geopolitical developments and regional conflicts could affect the environment in which the Company operates, resulting in volatilities in prices, foreign exchange rates and interest rates, which can negatively impact the value of the Company’s investments and/or demand for its shares. Excess exposure to any stocks or sectors, geographies or currencies could reduce diversification and lead to unacceptable volatility of returns. |
Board and Committees The closed-end structure of the Company is an essential part of the Board’s management of this risk, ensuring that parts of the portfolio do not have to be sold to raise liquidity to fund redemptions at short notice. Limits and restrictions set out in the Company’s Investment Policy are intended to mitigate the Company’s specific risk exposures. These are reviewed monthly by the Board. The Board reviews the Company’s performance against comparator indices on an ongoing basis and receives a formal report from the investment manager at quarterly meetings. The Board has a regular dialogue with the investment manager to assess the impact of geopolitical events and to evaluate both the risks and opportunities and considers asset allocation and concentration of the portfolio to minimise the risk associated with sector and/or geopolitical exposures. Key Service Providers Geopolitical risk forms part of the investment manager’s investment process and decisions and the investment manager reports sector risks arising from the general market and/ or specific geopolitical environments to the Board at each quarterly meeting. The Company does not hedge against any foreign currency movements, but income received from foreign investee companies is converted into sterling upon receipt. Reports and updates on the Company’s investment portfolio, including currency exposures and recent transactions, latest income and expense forecasts, as well as a monthly compliance report, confirming the Company’s compliance with its published Investment Policy and restrictions, or reporting any breaches or issues are prepared by the investment manager and Frostrow for the Board’s review regularly and at each quarterly meeting. |
|
Widening share price discount to NAV per share → |
Demand for shares in the Company declines due to failure to promote the Company, meet investors’ objectives, poor investment performance, and/or poor communication with shareholders (including information published on the Company’s website), resulting in falling share prices and widening of discount, and/or reputational damage. Arbitrageurs may acquire large stakes in the Company which could threaten its viability and the liquidity of its shares. Arbitrageurs may also restrict the strategy options open to the Company. This risk is heightened by the persistent wide discount to NAV per share in the investment trust sector. |
Board and Committees The Board operates a formal discount management and shareholder engagement governance framework, under which the Company’s share price, discount/premium to NAV, trading volumes and peer group trends are monitored on an ongoing basis. Persistent or adverse movements in demand or discount levels are discussed by the Board and, where appropriate, actions are considered and approved. The Board has authority to undertake share buy-backs and oversees the timing, scale and execution of any buy‑back activity as part of its capital management strategy. The Board holds periodic strategy sessions to review the Company’s investment objectives, strategy and structural features, and to consider actions intended to support shareholder demand for the Company’s shares. The Board has appointed an independent investment research provider to enhance transparency and understanding of the Company among retail investors and support informed demand. The Board receives regular reporting on shareholder composition and activity, including review of the shareholder register and key movements, to identify emerging concentration risks, changes in investor behaviour or negative trends. The Board has overseen enhancements to the Company’s dividend policy, including the introduction of an 8% p.a. dividend target, as part of its broader approach to maintaining the attractiveness of the Company’s shares. The Board maintains oversight of the Company’s continuation vote framework, including timetable, shareholder communication and engagement arrangements, recognising that the outcome of any vote is ultimately determined by shareholders. The Board recognises that market conditions and investor sentiment are external factors; however, the Board assesses the effectiveness of the governance framework and capital management authorities in place to manage discount risk. Key Service Providers ● The investment manager undertakes regular engagement with existing and potential investors to understand investor objectives and ensure the Company’s strategy remains appropriate; the Chair of the Board attends selected meetings. ● The investment manager, Cavendish, Frostrow’s Investor Relations team and Tavistock carry out co-ordinated marketing and investor relations activities to promote awareness of the Company and support demand for its shares. |
|
|
|
● The investment manager produces a monthly factsheet providing investment performance and portfolio information, which is published on the Company’s website, released via the regulatory news service and circulated to key investors. |
|
Key Person Risk ↑ |
Performance of the Company may be negatively affected by a change or loss of key personnel in the fund management team or the Board of Directors (Non-Executive Directors). The risk of manager loss is material given the specialist nature of the Fund. Loss of key personnel could result in poor performance, lower investor demand and/or a widening of the discount which could limit the strategic options of the Board. |
Board and Committees ● A formal framework operated by the Board and Management Engagement Committee to mitigate reliance on individual investment professionals, comprising: ● Appointment of an investment manager with a multi‑manager investment team structure with expertise in the resources space ● Contractual protections within the Investment Management Agreement, including: notice periods and termination provisions. ● Ongoing Board oversight of key personnel changes, succession planning arrangements, and manager resourcing and stability. ● Annual performance and appointment review by the Management Engagement Committee. ● The Nominations Committee oversees Board composition and succession planning, including the use of a skills matrix to assess the balance of experience and expertise on the Board and to identify and address any capability gaps. ● The Management Engagement Committee reviews the investment manager’s appointment and performance annually. ● The Board receives regular updates on developments and succession planning, where appropriate, and any key personnel changes at the Investment Manager. ● The Company’s agreement with the investment manager contains a six-month notice period, which helps minimise any potential disruptions from changes in key personnel. ● Board members spend time with the management team outside of meetings to build a rapport and understand any issues they may have. ● The Board documents in its minutes its review of succession planning, team resourcing and any changes in key personnel, and assesses whether the framework operated as intended during the period. ● Directors’ skillsets and succession planning are given regular and appropriate considerations during Board and Committee meetings. |
|
|
|
Key Service Providers ● There are two fund managers who are responsible for day-to- day portfolio management which reduces the risk of any one fund manager’s departure. |
|
|
|
● The investment manager has a broad team with experience in resources and commodities. They can pull on internal resources in the short term should the need arise. |
|
Cyber Risk ↑ |
Cyber risk has previously been monitored as an element of operational risk, but, given the heightened risk to information security as cyber criminals become more sophisticated and increasing reliance on electronic communication and storage of data, the Board now considers cyber risk and data security as a principal risk. The emergence of AI could jeopardise IT controls and this, together with cyber risk more generally, could cause reputational damage to the Company, threaten shareholder funds and ultimately the viability of the Company |
Board and Committees ● Due to the structure of the Company’s business model, all cyber risk rests with our service providers. Key service providers are highly regulated entities, nevertheless increased monitoring (such as regular cyber resilience and penetration testing) has been in operation and confirmations that cyber risk is appropriately controlled, and no significant incidents impacting the Company have occurred are provided to the Board on an annual basis. Key Service Providers ● The investment manager has introduced an AI controls procedure. ● Penetration testing is carried out by the investment manager and Frostrow, and other key services providers annually. Frostrow produces a regular compliance report, which includes any exceptions noted in any of the Company’s key service providers’ operations. |
Emerging risks
During Board discussions on principal risks and uncertainties, the Board considered any risks that were not an immediate threat but could arise in the longer term and have significant impact on the ability of the Company to continue to meet its objectives.
Focus areas have been the management of the Company’s portfolio since the resignation of its named portfolio managers in March 2026 and the subsequent transition of AIFM and Investment Manager, as well as the transition of other key operational service providers. The Board will continue to assess newly emerging risks on a regular basis to ensure that the implications for the Company are properly assessed and mitigating controls introduced where necessary.
Business Review
Introduction
This Business Review is designed to provide information primarily about the Company’s business and results for the year ended 30 June 2026. It should be read in conjunction with the Chairman’s Statement, and the Investment Manager’s Review, which give a detailed review of the investment activities for the year and look to the future.
Within the Business Review we discuss our approach to our stakeholder responsibilities within our S. 172 Statement and the Board’s review of the Company’s purpose, culture and values during the year. We also discuss our approach to social and governance matters and the environment below.
Investment objective
The Company seeks to provide shareholders with capital growth and income predominantly from a portfolio of mining and resource equities and of mining, resource and industrial fixed interest securities.
Investment policy
The Company invests predominantly in mining and resource equities and mining, resource and industrial fixed interest securities (including, but not limited to, preference shares, loan stocks and corporate bonds, which may be convertible and/or redeemable). The Company may invest in companies regardless of country, sector or size and the Company’s portfolio is constructed without reference to the composition of any stock market index or benchmark. Exposure to higher yielding securities may also be obtained by investing in other sectors, including closed-end investment companies and open-ended collective investment schemes.
The Company may, but is not obliged to, invest in derivatives, financial instruments, money market instruments and currencies for the purpose of efficient portfolio management.
The Company may acquire securities that are unquoted at the time of investment but which are about to be, or are immediately convertible at the option of the Company into securities which are, listed or traded on a stock exchange, and may continue to hold securities that cease to be quoted or listed if the Investment Manager considers this appropriate. In addition, the Company may invest up to 10 per cent. of its gross assets in other securities that are unlisted or unquoted at the time of investment.
The Company will not invest more than 15 per cent. in aggregate of the value of its total assets (measured at the time of investment) in other investment trusts or investment companies which are listed on the Official List except that this restriction does not apply to investments in other investment trusts or investment companies which themselves have published investment policies to invest no more than 15 per cent. of their total assets in other investment trusts or investment companies which are listed on the Official List.
The Company may borrow an amount up to 25 per cent. of shareholders’ funds (measured at the time of drawdown).
The Investment Manager expects that the Company will normally be fully invested. However, during periods in which changes in economic circumstances, market conditions or other factors so warrant, the Company may reduce its exposure to securities and increase its position in cash, money market instruments and derivative instruments in order to seek protection from stock market falls.
The Company’s performance in meeting its objectives is measured against key performance indicators (“KPIs”) as set out below.
Purpose, values and culture
The Board and the Investment Manager consider the expectations of the AIC Corporate Governance Code (the “AIC Code”) in the areas of corporate purpose, values and culture. The Board has identified the following for each on behalf of the Company:
Purpose – The Company’s purpose is defined as the Board working collaboratively with the Investment Manager to deliver its agreed investment approach within its chosen natural resource and mining sectors of the global economy to generate capital growth and income for investors, whilst cognisant of its regulatory, stakeholder and societal responsibilities.
Values – Given the Company’s status as a listed investment trust, and lack of direct employees, the Company’s values are essentially those of the Board and its interactions with its key third party advisers, which are defined by trust, rigorous review, and foresight amongst others.
Culture – The Board emphasises open collaboration between directors and the Company’s third-party advisers, including the Investment Manager, to create an environment conducive to effective decision-making. This also facilitates prompt and appropriate response to material issues by the Board. Where necessary, the Board challenges to ensure that performance is maintained on behalf of investors and stakeholders.
Investment manager and management fees
For the year ended 30 June 2026 and until 14 September 2026, the Company’s investments were managed by CQS (UK) LLP (trading as Manulife | CQS Investment Management). Ian Francis stepped away from his role as co-portfolio manager during the year, with effect from 28 October 2025. Keith Watson and Robert Crayfourd remained as the named co-portfolio managers until May 2026, following receipt of their resignations in March 2026. Between May 2026 and 14 September 2026, two senior Manulife Investment Management Group portfolio managers, Craig Bethune and Diana Racanelli, took over management of the Company’s portfolio on an interim basis. Previously, CQS (UK) LLP was entitled to receive a management fee of 1.0 per cent. on net assets.
As announced during the year, Tufton Investment Management Ltd (“Tufton”) were appointed as investment manager and Keith Watson and Robert Crayfourd resumed as the Company’s named portfolio managers with effect 14 September 2026. Further details on the portfolio managers can be found on page 3 of the Annual Report.
Tufton are entitled to receive a management fee of 1.0 per cent. on net assets. This is in line with the reduced investment management fee introduced in May 2025. The Company’s Investment Management Agreement shall be terminable during the 12 months following 14 September 2026 (the “Initial Period”) by the Company serving three months’ notice to Tufton (which for the avoidance of doubt may expire after the Initial Period) or Tufton serving six months’ notice to the Company. After the Initial Period, the Investment Management Agreement shall be terminable by either party serving six months’ notice to the other.
The Board keeps under review the appropriateness of the Investment Manager’s appointment. In doing so the Management Engagement Committee considers the investment performance of the Company and the capability and resources of the Investment Manager to deliver satisfactory investment performance. It also considers the length of the notice period of the investment management agreement and the fees payable to the Investment Manager, together with the standard of the other services provided.
The Board concluded that the appointment of Tufton, together with the continued involvement of Keith Watson and Robert Crayfourd, would provide continuity for the portfolio, preserve the Company’s established investment strategy and be in the best interests of shareholders as a whole.
Frostrow Capital LLP is appointed as Company Secretary and Administrator as well as providing Investor Relations and Marketing services. Equiniti Limited is appointed as the Company’s share registrar.
UK Alternative Investment Fund Managers Directive (“UK AIFMD”)
As at 30 June 2026, CQS (UK) LLP, trading as Manulife | CQS Investment Management, was appointed as the Company’s alternative investment fund manager (“AIFM”). CQS (UK) LLP had been approved by the FCA to act as AIFM of the Company. A requirement of the UK AIFMD is for the Company to appoint a depositary to oversee the custody and cash arrangements and undertake other UK AIFMD required depositary responsibilities. As at 30 June 2026 BNP Paribas S.A., London Branch was appointed as the Company’s depositary. As described above, Tufton Investment Management Ltd was appointed as the Company’s AIFM with effect from 14 September 2026. Apex Depositary (UK) Limited was appointed as the Company’s depositary from the same date.
Further UK AIFMD disclosures as at 30 June 2026 are shown on page 94 of the Annual Report.
Long-term viability statement
In accordance with the provisions of the AIC Code, the Directors have assessed the viability of the Company over a period of three years, which reflects the long-term nature of its investment objective, and the longer-term view adopted by the Investment Manager when making investment decisions and delivering total returns to shareholders.
The Board has reviewed the Company’s financial position and its ability to liquidate its portfolio and meet its expenses as they fall due and, in doing so, noted the following:
the assumption that the loan facility is rolled over rather than repaid. The Company had a secured loan facility with BNP Paribas S.A., London Branch which expired on 11 September 2026 after a two-year period. A new secured facility was agreed with The Bank of Nova Scotia, London Branch with effect 11 September 2026 on an evergreen basis. In order to assess the impact of underperformance of the portfolio on the loan, the Board reviewed a series of stress tests and detailed financial modelling including in particular the effects of any substantial future falls in investment value on the Company’s ability to repay and re-negotiate borrowings, potential breaches of loan covenants and the maintenance of dividend payments. All tests concluded that there was no uncertainty over the Company’s financial viability over the assessment period;
Directors monitor and discuss the effects of any risks such as geopolitical events, inflation levels and adverse market conditions on the Company’s investment strategy, outlook and financial position. Underlying core revenue income from the Company’s portfolio continues to be strong and the Board believes that the Company is well placed to withstand the wider economic effects of the ongoing geopolitical events. The Board was therefore comfortable to declare a fourth quarterly interim dividend and special interim dividend payment, to be drawn from the Company’s strong reserves, and also firmly considers it is appropriate to adopt the going concern basis as at 30 June 2026;
that the continuation vote should not be a factor to affect the three-year period given the ongoing support of shareholders. As part of the Tender Offer and value enhancing initiatives announced by the Company on 28 May 2025, and approved by shareholders at the General Meeting held on 25 June 2025, the annual continuation vote has been postponed until the AGM in 2028 and will move to biennial votes thereafter;
that the diverse nature of investments held gives stability and liquidity along with flexibility to be able to react positively to market and political forces outside of the Board’s control;
the assumption that there are no significant changes in market conditions or the tax and regulatory environment that could not reasonably have been foreseen;
the impact of potential regulatory change and the controls in place surrounding significant third-party providers, including the Investment Manager. The Board also noted the liquidity in the portfolio where the percentage of Level 1 listed investments held at the year end was 98.8% (2025: 97.4%);
the Company’s processes for monitoring investment revenue and costs, with the use of frequent revenue forecasts, and the Investment Manager’s compliance with the investment objective and policies. The Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due;
Directors do not currently expect there to be any significant change to the current principal risks facing the Company. Furthermore, the Directors do not envisage any change in strategy which would prevent the Company from operating over the three-year period; and
Directors have carried out a robust assessment of the principal risks and potential emerging risks facing the Company. These risks and their mitigations are set out above. The principal risks identified as most relevant to the assessment of the viability of the Company were those relating to a future macro-event likely to have a material impact on the financial position of the Company and the potential under-performance of the portfolio and its effect on the ability to pay dividends. When assessing these risks, the Directors have considered the risks and uncertainties facing the Company in severe but plausible scenarios, taking into account the controls in place and mitigating actions that could be taken.
After making enquiries of the Company’s Investment Manager, and having considered the Company’s investment objective, nature of the investment portfolio and expenditure projections, and a detailed assessment of the Company’s ability to meet its liabilities as they fall due, the Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, and in light of the Company’s long-term investment record, the Directors are satisfied that it is appropriate to adopt the going concern basis in preparing the accounts.
Based on the results of its review and taking into account the long-term nature of the Company and its financing, the Board has a reasonable expectation that the Company will be able to continue its operations and meet its expenses and liabilities as they fall due for the foreseeable future, taken to mean at least the next three years. The Board has chosen this period as the timeframe being deemed most appropriate to the cycles within which the Company’s investee companies operate and the sectors of the economy in which the portfolio is concentrated. The Board continues to consider that this period also reflects the long-term objectives of the Company, being a Company with no fixed life, whilst considering the impact of uncertainties in the markets.
Performance Measurement and Key Performance Indicators (“KPIs”)
The Board uses a number of performance measures to assess the Company’s success in meeting its objectives. The tables and data in the Performance Record above show how the Company has performed against those KPIs, and a glossary of terms and alternative performance measures is included below.
The KPIs, which are used to measure progress and performance over time and which are comparable with those reported by other investment trusts are as follows:
Investment Performance
The Company does not utilise a formal benchmark. To assess investment performance, the Board monitors and publishes the Company’s NAV per share performance relative to that of two comparator indices: the MSCI World Metals and Mining Index (sterling adjusted) and the MSCI World Energy Index (sterling adjusted) as these best reflect the potential returns.
The Company invests principally in equity-related investments in companies, usually mid and small cap companies, with a wide range of commodity exposures as well as a number of fixed interest securities.
The performance of the NAV and comparative indices are shown in the Key Metrics section with statistics also shown under Performance Record. Over a five year period, the Company’s share price and NAV total returns have both outperformed its comparator indices, as shown by the graph on page 31 of the Annual Report.
Refer to the Chairman’s Statement for the Chairman’s commentary on the Company’s development and performance during the year as well as the position of the Company’s business as at the year end.
Dividend per share
As part of the Tender Offer and value enhancing initiatives announced on 28 May 2025, the Company also announced the adoption of an enhanced annual dividend of circa 8 per cent. of NAV via a quarterly dividend of 2 per cent. of the preceding quarter-end NAV per share, using capital reserves as necessary, starting from the quarter ended 30 June 2025. In respect of the year under review, four interim dividends per share totalling 28.30 pence per share were declared (2025: 8.03 pence per share).
Ongoing charges ratio
The ongoing charges ratio is a measure of the total expenses incurred by the Company expressed as a percentage of the average shareholders’ funds over the year. The Board regularly reviews the ongoing charges and monitors all expenses. For the year under review the ongoing charges ratio is 1.7% (2025: 2.0%).
Dividend yield and ongoing charges ratio fall within the definition of “Alternative Performance Measures” (“APMs”) under guidance issued by the European Securities and Markets Authority (“ESMA”). Additional information explaining how these are calculated is set out in the Glossary below.
The Directors have carefully selected these KPIs as in their view these combine to provide the most appropriate measures of performance, both in terms of managing the business and presentation to shareholders and stakeholders. The Board is satisfied that performance against each measure has been satisfactory in the context of the events in the financial year.
Further information regarding forward looking assessments for the KPIs can be found in the Chairman’s Statement and Investment Manager’s Review.
Future prospects
The Chairman’s Statement and the Investment Manager’s Review include a review of developments during the year as well as information on investment activity within the Company’s portfolio and the factors likely to affect the future performance of the Company.
Employees, Social, Human Rights and Environmental matters
As an externally managed investment trust, the Company has no employees and accordingly it has no direct social or community impact and very limited environmental impact from its operations. Nevertheless, the Board determines that, given the profile of the natural resource sectors on which the investment strategy focuses, it is important that the Investment Manager monitors performance across these areas, specifically including human rights and health and safety performance, in finalising investment decisions.
The Directors recognise that their first duty is to act in the best financial interests of the Company’s shareholders and to achieve good financial returns against acceptable levels of risk, in accordance with the objectives of the Company.
In asking the Investment Manager to deliver against these objectives, the Directors have also requested that the Investment Manager take into account the broader social, ethical and environmental issues of all companies within the Company’s portfolio, acknowledging that companies failing to manage these issues adequately run a long-term risk to the sustainability of their businesses.
More specifically, to access capital they now expect companies to demonstrate ethical conduct, effective management of their stakeholder relationships, responsible management and mitigation of social and environmental impacts, as well as due regard for wider societal issues. The Investment Manager is expected to engage with investee companies on these themes, in line with the expectations of the UK Stewardship Code.
Please refer to page 36 of the Annual Report for further detail on the ESG approach of CQS (UK) LLP, the investment manager as at 30 June 2026. Further details of Tufton Investment Management’s Responsible Investing Policy are available at: https://www.tufton.com/responsible-investing.
Stakeholder Interests (S. 172 statement)
The following ‘Section 172’ disclosure, which is required by the Companies Act 2006 and the AIC Code, as explained below, describes how the directors have had regard to the views of the Company’s stakeholders in their decision-making. The Board regularly reviews its responsibilities vis-à-vis Section 172 of the Companies Act 2006, in conjunction with the Company Secretary. The key areas, being only those relevant to the Company as a listed investment trust, are applied to all relevant board decision-making:
(a) the likely consequences of any decision in the longer term;
(c) the need to foster the Company’s business relationships with suppliers, customers and others;
(d) the impact of the Company’s operations on the community and the environment;
(e) the desirability of the Company maintaining a reputation for high standards of business conduct; and
(f) the need to act fairly between members of the Company.
The Board considers the factors outlined under Section 172 and the wider interests of stakeholders as a whole in all decisions it takes on behalf of the Company.
Who? Stakeholder group: Shareholders
Why?
The benefit of engagement with the Company’s stakeholders
Shareholders are the owners of the Company and the Board’s principal responsibility is to promote the long-term success of the Company for their benefit as a whole.
Clear communication of the Company’s strategy and the performance against the Company’s objective can help the share price trade closer to its NAV per share which benefits shareholders. The Board operates an investment strategy designed to deliver strong performance over the medium to longer term, based on exposure to valuable commodity markets.
New shares may be issued to meet demand without net asset value per share dilution to existing shareholders. Increasing the size of the Company can benefit liquidity as well as spread costs.
While share buybacks will not necessarily prevent the discount from widening further, particularly in times of market volatility, they may, to a limited extent, mitigate a widening trend. In addition, buybacks enhance the net asset value per share for remaining shareholders, provide some additional liquidity and help to dampen discount volatility which can damage shareholder returns. The Board has resolved to use share buybacks with the aim of maintaining a single digit discount to the Company’s net asset value per share in normal market conditions, taking into account the inherent volatility of the markets in which the Company invests.
How?
How the Board and the Company’s service providers have engaged with the Company’s stakeholders
The Investment Manager and Frostrow Capital LLP’s investor relations & marketing team, on behalf of the Board, complete a programme of investor relations throughout the year.
An analysis of the Company’s shareholder register is provided to the Directors at each Board meeting along with investor relations and marketing reports from the Company Secretary and Administrator. The Board reviews and considers the marketing plans on a regular basis. Reports from the Company’s broker are submitted to the Board on investor sentiment and industry issues. At each meeting the Board reviews movements in the Company’s shareholder register. There are regular interactions and engagement with shareholders (including at the AGM). Regular feedback from shareholders is received from the Company’s broker.
Shareholders’ rights are protected under the Company’s Articles of Association which require any proposal that may materially change those rights to be subject to prior approval by a majority of shareholders in general meeting.
What?
The key areas of engagement
Ongoing dialogue with shareholders concerning the strategy of the Company, performance and the portfolio.
Key mechanisms of engagement include:
- The Annual General Meeting, whereby shareholders are invited to attend, ask questions and vote;
- The Chairman and non-executive directors make themselves available to engage with shareholders;
- The Company’s website hosts reports, video interviews with the portfolio managers and monthly factsheets; and
- One-on-one investor meetings facilitated by Frostrow Capital LLP who actively engage with professional investors, typically discretionary wealth managers, some institutions and a range of execution-only platforms. Regular engagement helps to attract new investors and retain existing shareholders, and over time results in a stable share register made up of diverse, long-term holders.
In the event of any significant (defined as 20% or more of those voting) vote against any of the resolutions put to shareholders at the AGM, the Board will explain in its announcement of the results of the AGM the actions it intends to take to consult shareholders in order to understand the reasons behind any significant votes against resolutions. Following the consultation, an update will be published no later than six months after the AGM and the annual report will detail the impact the shareholder feedback has had on any decisions the Board has taken and any actions or resolutions proposed.
Outcomes and Actions
The actions, principal decisions and outcomes
Shareholders are provided with performance updates via the Company’s website as well as the annual and half-year financial reports and monthly factsheets. The Investment Manager and Frostrow’s investor relations and marketing team meet regularly with shareholders and potential investors to discuss the Company’s strategy, performance and portfolio. Both the Investment Manager and Frostrow also engage with the Press on the Company’s behalf.
The Board aims to ensure that key matters affecting the Company are communicated clearly to shareholders and encourages shareholder voting on proposals put forward by the Board. Information on how shareholders can vote their Company shares on a selection of major platforms can be found by following the link within the Notice of Meeting on page 92 of the Annual Report.
The Board and the Company’s advisers review the Company’s share price discount/premium on a daily basis. In the financial year to 30 September 2026, the Company both bought back shares into treasury in response to widening share price discount to NAV and issued shares from treasury to satisfy investor demand when the Company’s shares traded at a premium to NAV.
The Board, on the recommendation of the Audit Committee, approved the proposed appointment of PricewaterhouseCoopers LLP following a formal audit tender. The appointment, for the audit for the year ending 30 June 2027, will be submitted to shareholders for approval at the Annual General Meeting.
Who? Stakeholder group: AIFM and Investment Manager
Why?
The benefit of engagement with the Company’s stakeholders
The investment manager and AIFM is integral to the delivery of the Company’s investment objective, portfolio management, risk management and regulatory compliance obligations.
Engagement with the Investment Manager is necessary to:
- evaluate their performance against the Company’s stated strategy and to understand any risks or opportunities this may present;
- ensure that portfolio management costs are closely monitored and remain competitive; and
- better understand the internal controls in place.
The Board ensures that the Investment Manager’s ESG approach meets standards set by the Board.
How?
How the Board and the Company’s service providers have engaged with the Company’s stakeholders
Representatives of the AIFM attend each quarterly Board meeting and present a report on investment performance and other related matters. Between meetings the Board maintains regular contact with the Investment Manager.
The Audit Committee annually review reports from the AIFM’s Money Laundering Reporting Officer and Compliance Officer to assess the adequacy and effectiveness of both functions.
What?
The key areas of engagement
Portfolio composition, performance, ESG matters, outlook, and business updates.
The integration of ESG into the Investment Manager’s investment processes.
A key focus during the year was the resignation of the Company’s named portfolio managers and the Board’s subsequent consideration of the future investment management arrangements. The Board assessed the implications for shareholders, investment continuity, retention of specialist natural resources expertise and the long-term competitiveness of the Company. The Board also considered the appointment of a new Investment Manager and associated AIFM arrangements.
Outcomes and Actions
The actions, principal decisions and outcomes
The Board’s appointed Investment Manager is committed to integrating environmental, social and governance themes into both its research engagement and investment activities. Both its previous and current investment manager are also signatories to the Principles for Responsible Investment, amongst other initiatives. Further details of the Investment Manager’s ESG related activities and reports can be found on page 36 of the Annual Report.
Since the resignations, the Company considered the options available to it to move forward in the best interests of shareholders. These options included remaining with CQS or appointing a new investment manager so the Board conducted a search of possible investment management groups with expertise and a proven track record of performance in the natural resources sector.
The Board engaged in a number of discussions with investment management firms (including but not exclusively, CQS and Tufton), conducted the necessary due diligence and took into account the learnings and results of its wide ranging strategic review in 2025. The Board concluded that the appointment of Tufton as investment manager, and the ongoing stewardship of the portfolio by Keith and Robert, are in the best interests of shareholders.
Advised by the Company Secretary and Administrator, undertook due diligence on Tufton Investment Management Ltd (“Tufton”) as the Company’s new investment manager. The Board evaluated the experience and resources of the wider Tufton team.
The Board oversaw an orderly transfer of responsibilities with a view to minimising operational risks and impact to the management of the portfolio.
Who? Stakeholder group: Service Providers
Why?
The benefit of engagement with the Company’s stakeholders
As an externally managed investment company, the Company does not have employees. Its main stakeholders therefore comprise its shareholders and a small number of service providers. The Board has delegated a wide range of activities to external agents, in addition to the Investment Manager.
The Company contracts with third parties for other services including: depositary, investment accounting & administration as well as company secretarial and registrars. The Company ensures that the third parties to whom the services have been outsourced complete their roles in line with their service level agreements and are able to continue to provide these services, thereby supporting the Company in its success and ensuring compliance with its obligations.
How?
How the Board and the Company’s service providers have engaged with the Company’s stakeholders
Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of the services offered, including the control systems in operation in so far as they relate to the affairs of the Company. The Board regularly evaluates the performance of its third-party service providers.
The Directors have frequent engagement with the Company’s other service providers through the annual cycle of reporting and due diligence meetings or site visits by the Company Secretary and Administrator. This engagement is completed with the aim of maintaining an effective working relationship and oversight of the services provided.
What?
The key areas of engagement
The Board met regularly with representatives of the Company Secretary and Administrator which attend every Board meeting to provide updates on risk management, accounting, administration and corporate governance matters. The Company Secretary and Administrator will periodically conduct oversight visits to the Company’s service providers.
Following notice to terminate the provision of depositary and custody services to the Company by BNP Paribas, the Board, with the support of the Company Secretary and Administrator, reviewed alternative service providers. In doing so, the Board considered quality of service, value for money, operational resilience and transition risks.
During the year, the Audit Committee conducted a formal tender for the Company’s external audit. The tender process considered audit quality, the experience and resources of the proposed audit teams, independence, approach to transition, service levels and the proposed fees.
Outcomes and Actions
The actions, principal decisions and outcomes
All service providers engaged and supplied requested information for the due diligence exercise to be completed.
Reviews of the Company’s service providers in June 2026 were positive, and the Directors believe the continued appointment of those other than the depositary and custodian is in the best interests of the Company. The Board oversaw the orderly transition of service providers and will continue to monitor service standards following appointment of new service providers.
The Audit Committee met with BDO LLP to review the audit plan for the year, agree their remuneration, review the outcome of the annual audit and to assess the quality and effectiveness of the audit process.
Following completion of the tender process, the Audit and Risk Committee recommended the appointment of PricewaterhouseCoopers LLP, which the Board concluded was in the best interests of the Company and its shareholders as a whole. The appointment, for the audit for the year ending 30 June 2027, is subject to shareholder approval at the forthcoming Annual General Meeting. The Audit Committee will oversee the transition to support an orderly handover and maintain the quality and continuity of the external audit. Please refer to the Audit Committee Report beginning on page 52 of the Annual Report for further information.
Who? Stakeholder group: The Company’s Lender
Why?
The benefit of engagement with the Company’s stakeholders
Investment companies have the ability to borrow with a view to enhancing long-term returns to shareholders. Engagement with the Company’s lender ensures that it fully understands the nature of the Company’s business, the strategy adopted by the Investment Manager and the extent to which the Company complies with is loan covenants.
How?
How the Board and the Company’s service providers have engaged with the Company’s stakeholders
Regular monitoring of gearing levels and reporting to the lender with respect to adherence with loan covenants and ad hoc meetings with the AIFM.
During the year, the previous AIFM engaged with BNP Paribas following the announcement of the result of the Tender Offer which would result in a reduction in the size of the Company.
In view of the changing AIFM responsibilities, the Company Secretary and Administrator engaged with the provider of the Company’s previous loan facility in advance of expiry in September 2026.
What?
The key areas of engagement
Continued compliance with covenants set out within the loan agreement between the Company and the lender.
In order to reflect the reduced size of the Company and to ensure compliance with loan covenants, it was agreed that the loan facility due to expire in September 2026 should be reduced.
The Company Secretary and Administrator sought quotations from the previous and alternative lenders and the Board considered the replacement of the Company’s expiring lending arrangements. In assessing the proposed change, the Board considered financing terms and value for money, flexibility, covenant requirements and operational implications.
Outcomes and Actions
The actions, principal decisions and outcomes
The Board ensures compliance with loan covenants throughout the year.
The Board met on 11 September 2025 to consider the reduction of the Company’s loan facility and review an Amendment Agreement relating to the Company’s Facility Agreement with BNP Paribas. The Amendment Agreement was approved and the Company’s secured revolving credit facility was reduced from £25 million to £15 million with effect from 11 September 2025.
As detailed in Note 12 below, the Company entered into an ‘evergreen’ agreement with The Bank of Nova Scotia, London Branch with improved commercial terms on 11 September 2026.
Relations with shareholders
The Directors place a great deal of importance on communication with shareholders. The annual report is widely distributed to other parties who have an interest in the Company’s performance. Shareholders and investors may obtain up to date information on the Company through its website. The Company responds to correspondence from shareholders on a wide range of issues.
A regular dialogue is maintained with the Company’s institutional shareholders and with private client asset managers. Reference to significant holdings in the Company’s ordinary shares can be found under “Substantial Interests in the Company’s Shares” on page 39 of the Annual Report. The Notice of the annual general meeting included within the annual report and financial statements is sent out at least 20 working days in advance of the AGM. All shareholders have the opportunity to put questions to the Board or Investment Manager, either formally at the Company’s AGM or subsequent to the meeting when light refreshments will be offered to shareholders.
Disclosure and transparency rules
Other information required to be disclosed pursuant to the Disclosure Guidance and Transparency Rules has been placed in the Directors’ Report on pages 38 to 42 of the Annual Report because it is information which refers to events that have taken place during the course of the year.
By order of the Board
Christopher Casey
Chairman
27 October 2026
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company Law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law).
Under Company Law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that year. In preparing the financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- state whether applicable United Kingdom Accounting Standards, comprising FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements;
- make judgements and accounting estimates that are reasonable and prudent; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are also responsible for:
- safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities;
- keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006;
- preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that comply with relevant laws and regulations; and
- the maintenance and integrity of the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility Statement
The Directors consider that the Annual Report and Financial Statements, taken as a whole, are fair, balanced, understandable and provide the information necessary for shareholders to assess the Company’s position, performance, business model and strategy.
Each of the Directors, whose names and functions are listed in the ‘Board of Directors’ section on page 37 of the Annual Report confirms that, to the best of their knowledge:
- the Company’s Financial Statements, which have been prepared in accordance with United Kingdom Accounting Standards give a true and fair view of the assets, liabilities, financial position and profit of the Company; and
- the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
On behalf of the Board
Christopher Casey
Chairman
27 October 2026
Note to those who access this document by electronic means:
The Annual Report for the year ended 30 June 2026 has been approved by the Board of City Natural Resources Growth and Income PLC. Copies of the Company’s annual report and half year report are circulated to shareholders and, where possible, to potential investors. It is also made available in electronic format for the convenience of readers. Printed copies are available from the Company Secretary’s office in London.
Income Statement
|
|
|
Year ended 30 June 2026 |
Year ended 30 June 2025 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
Notes |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Gains on investments held at fair value through profit or loss |
9 |
– |
53,693 |
53,693 |
– |
6,425 |
6,425 |
|
Exchange gains/(losses) on foreign currencies |
|
– |
88 |
88 |
– |
(118) |
(118) |
|
Income |
2 |
1,908 |
2,648 |
4,556 |
2,571 |
1,324 |
3,895 |
|
Investment management fee |
3 |
(319) |
(958) |
(1,277) |
(391) |
(1,175) |
(1,566) |
|
Other expenses |
4 |
(903) |
(14) |
(917) |
(1,803) |
– |
(1,803) |
|
Net return before finance costs and tax |
|
686 |
55,457 |
56,143 |
377 |
6,456 |
6,833 |
|
Finance costs |
5, 11 |
(165) |
(495) |
(660) |
(234) |
(701) |
(935) |
|
Net return before tax |
|
521 |
54,962 |
55,483 |
143 |
5,755 |
5,898 |
|
Taxation |
6, 11 |
(81) |
(67) |
(148) |
(143) |
(25) |
(168) |
|
Net return for the year |
|
440 |
54,895 |
55,335 |
– |
5,730 |
5,730 |
|
Basic and diluted return per ordinary share (pence) |
8 |
1.02p |
127.75p |
128.77p |
0.00p |
8.88p |
8.88p |
The “total” column of this statement is the Income Statement of the Company, prepared in accordance with Financial Reporting Standard 102 (“FRS 102”). The supplementary revenue and capital columns are presented in accordance with the Statement of Recommended Practice issued by the AIC (“AIC SORP”).
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.
There is no other comprehensive income, and therefore the net return for the period is also the total comprehensive income. The Notes form part of these Financial Statements.
Balance Sheet
|
|
|
As at |
As at |
|
|
|
30 June |
30 June |
|
|
|
2026 |
2025 |
|
|
Notes |
£’000 |
£’000 |
|
Fixed assets |
|
|
|
|
Investments at fair value through profit or loss |
9 |
139,927 |
143,266 |
|
Current assets |
|
|
|
|
Debtors |
10 |
122 |
406 |
|
Cash at bank |
|
961 |
2,404 |
|
|
|
1,083 |
2,810 |
|
Current liabilities |
|
|
|
|
Bank overdraft |
|
(169) |
– |
|
Creditors: amounts falling due within one year |
11 |
(623) |
(700) |
|
Bank loan |
12 |
(14,500) |
(9,000) |
|
Net current liabilities |
|
(14,209) |
(6,890) |
|
Net assets |
|
125,718 |
136,376 |
|
Capital and reserves |
|
|
|
|
Called-up share capital |
13 |
11,589 |
16,722 |
|
Share premium |
|
8,748 |
4,851 |
|
Treasury shares |
13 |
(2,536) |
(683) |
|
Capital redemption reserve |
|
5,133 |
– |
|
Special distributable reserve |
|
13,977 |
21,449 |
|
Capital reserve |
|
88,807 |
94,037 |
|
Revenue reserve |
|
– |
– |
|
Equity shareholders’ funds |
|
125,718 |
136,376 |
|
Net asset value per ordinary share (pence) |
14 |
347.19p |
212.56p |
Company number: 02978531
These Financial Statements were approved by the Board of Directors and authorised for issue on 27 October 2026 and were signed on its behalf by:
Christopher Casey
Chairman
The Notes form part of these Financial Statements.
Statement of Changes in Equity
|
|
|
Called-up |
|
|
Capital |
Special |
|
|
|
|
|
|
Share |
Share |
Treasury |
redemption |
distributable |
Capital |
Revenue |
|
|
|
|
capital |
premium |
shares |
reserve |
reserve |
reserve |
reserve |
Total |
|
|
Notes |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
|
For the year ended 30 June 2026 |
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2025 |
|
16,722 |
4,851 |
(683) |
– |
21,449 |
94,037 |
– |
136,376 |
|
Net return for the year |
|
– |
– |
– |
– |
– |
54,895 |
440 |
55,335 |
|
Shares bought back into treasury |
|
– |
– |
(191) |
– |
(2,541) |
– |
– |
(2,732) |
|
Shares issued from treasury |
|
– |
3,897 |
538 |
– |
3,812 |
– |
– |
8,247 |
|
Tender offer |
|
(5,133) |
– |
(2,200) |
5,133 |
– |
(60,125) |
– |
(62,325) |
|
Dividends paid |
|
– |
– |
– |
– |
(8,743) |
– |
(440) |
(9,183) |
|
Balance at 30 June 2026 |
|
11,589 |
8,748 |
(2,536) |
5,133 |
13,977 |
88,807 |
– |
125,718 |
|
For the year ended 30 June 2025 |
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2024 |
|
16,722 |
4,851 |
(182) |
– |
27,127 |
88,307 |
1,741 |
138,566 |
|
Net return for the year |
|
– |
– |
– |
– |
– |
5,730 |
– |
5,730 |
|
Shares bought back into treasury |
|
– |
– |
(501) |
– |
(3,135) |
– |
– |
(3,636) |
|
Dividends paid |
7 |
– |
– |
– |
– |
(2,543) |
– |
(1,741) |
(4,284) |
|
Balance at 30 June 2025 |
|
16,722 |
4,851 |
(683) |
– |
21,449 |
94,037 |
– |
136,376 |
The special distributable reserve, capital reserve (excluding the unrealised gains on Level 2 and Level 3 investments detailed in Note 9) and the revenue reserve are distributable by way of dividend. The Company’s net distributable reserve is £102,070,000 (2025: £115,486,000) after taking into account the unrealised cumulative gains of £714,000 (2025: unrealised cumulative losses of £20,861,000) relating to Level 2 and Level 3 investments in the portfolio.
The Notes form part of these Financial Statements.
Cash Flow Statement
|
|
|
Year ended |
Year ended |
|
|
|
30 June |
30 June |
|
|
|
2026 |
2025 |
|
|
Notes |
£’000 |
£’000 |
|
Operating activities |
|
|
|
|
Investment income received (net of withholding tax) |
|
4,469 |
3,633 |
|
Deposit interest received |
|
95 |
80 |
|
Investment management fees paid |
|
(1,301) |
(1,454) |
|
Overseas withholding tax reclaims received |
|
158 |
– |
|
Other expenses paid |
|
(1,029) |
(1,826) |
|
Net cash inflow from operating activities |
|
2,392 |
433 |
|
Investing activities |
|
|
|
|
Purchases of investments |
|
(55,918) |
(37,869) |
|
Disposals of investments |
|
47,470 |
53,984 |
|
Disposals of investments - tender offer |
|
65,921 |
– |
|
Net cash inflow from investing activities |
|
57,473 |
16,115 |
|
Financing activities |
|
|
|
|
Equity dividends paid |
|
(9,183) |
(4,284) |
|
Shares bought back into treasury |
|
(2,730) |
(3,752) |
|
Shares issued from treasury |
|
8,247 |
– |
|
Cash payment to tendering shareholders |
|
(62,752) |
– |
|
Drawdown from/(repayment of) credit facility |
12 |
5,500 |
(8,000) |
|
Interest and costs paid on bank loan |
|
(647) |
(942) |
|
Net cash outflow from financing activities |
|
(61,565) |
(16,978) |
|
Decrease in net cash |
|
(1,700) |
(430) |
|
Reconciliation of net cash flow movement to movement in net cash |
|
|
|
|
Decrease in net cash during the year |
|
(1,700) |
(430) |
|
Foreign exchange gains/(losses) on cash |
|
88 |
(118) |
|
Movement in net cash during the year |
|
(1,612) |
(548) |
|
Opening cash balance at 1 July |
|
2,404 |
2,952 |
|
Closing cash balance at 30 June |
|
792 |
2,404 |
The Notes form part of these Financial Statements.
Notes to the Financial Statements
for the year ended 30 June 2026
1 Accounting policies
City Natural Resources Growth and Income PLC (formerly CQS Natural Resources Growth and Income PLC) is a public company limited by shares, incorporated in accordance with the Laws of England and Wales. Details of the registered office are included on page 95 of the Annual Report.
A summary of the principal accounting policies adopted is set out below.
(a) Basis of accounting
The financial statements are prepared on a going concern basis, in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Principles (“UK GAAP”) including FRS102 ‘The Financial Reporting Standard applicable in the UK and Ireland’ and the Statement of Recommended Practice regarding the Financial Statements of Investment Trust Companies and Venture Capital Trusts (“SORP”) issued by the Association of Investment Companies in December 2025.
The Company’s financial statements are presented in sterling, being the functional and presentational currency of the Company. All values are rounded to the nearest thousand pounds (£’000) except where otherwise indicated.
Having considered the Company’s investment objective, nature of the investment portfolio, loan facility, expenditure projections, suitable stress testing and the impact of the current geopolitical and market uncertainty, covering a period of 12 months from the date this Report is approved, the Directors are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the Financial Statements.
(b) Financial assets
All financial assets are initially recognised at fair value, recorded at the date on which the Company became party to the contractual requirements of the financial asset, with the related transaction costs expensed under the capital column of the Income Statement. Subsequently, they are measured at fair value through profit or loss.
Cash at bank
Cash comprises cash at bank, which is carried at amortised cost.
(c) Financial liabilities
All financial liabilities are initially recognised at fair value net of transaction costs incurred, recorded on the date on which the Company becomes party to the contractual requirements of the financial liability, and subsequently carried at amortised cost with the exception of bank loans, which are measured at cost, being the fair value of the consideration received.
(d) Fixed asset investments
Financial assets which comprise equity shares, preference shares, fixed income securities and warrants, are classified as held at fair value through profit or loss as the financial assets are managed and their performance is evaluated on a fair value basis in accordance with the Company’s investment strategy and this is also the basis on which information about investments is provided internally to the Board.
Purchases or sales of financial assets are recognised/derecognised on the date the Company trades the investments. On initial recognition investments are classified at fair value as fair value through profit or loss with any resultant gain or loss, including any gain or loss arising from a change in exchange rates, recognised in the Income Statement. For listed securities this is either the bid price or last traded price, depending on the convention of the exchange on which the investment is listed.
Financial assets which are not listed, or where trading in the securities of an investee company is suspended, are valued at the Board’s estimate of fair value in accordance with International Private Equity and Venture Capital Valuation (“IPEV”) guidance. Unquoted financial assets are valued on the basis of all the information available to them at the time of valuation. This includes a review of the financial and trading information of the Company, covenant compliance, ability to pay the interest due and cash held. Valuation methodologies for the Company’s unquoted investments include:
- the last published net asset value or traded share price of the security, after adjustment for factors that the AIFM and Board believe would affect the amount of cash that the Company would receive if the security were realised as at the reporting date; or
- the estimated, discounted cash distribution based on information provided by the management or liquidators of the security. The discount applied will take account of various factors, including the expected timings of the cash flow and the level of certainty associated with the estimate; or
- in the case of warrants, a widely accepted valuation model, such as the Black-Scholes model.
Changes in fair value and gains or losses on disposal are included in the Income Statement as a capital item.
(e) Income
Dividends receivable on equity shares are recognised as income on the date that the related investments are marked ex-dividend. Dividends receivable on equity shares where no ex-dividend date is quoted are recognised as income when the Company’s right to receive payment is established. Dividend income is recognised through the revenue or capital column of the Income Statement based on the nature of the distributions. Income from special dividends is taken to capital where relevant circumstances indicate that the dividends are capital in nature.
Fixed interest returns on non-equity shares are recognised on a time apportioned basis so as to reflect the effective interest rate on those instruments. Any difference between acquisition cost and maturity value is recognised as revenue over the life of the security using the effective yield basis of calculating amortisation. Other returns on non-equity shares are recognised when the right to the return is established. Income from deposit interest and underwriting commission is recognised on an accruals basis.
(f) Taxation
The charge for taxation is based on net revenue for the year. The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue on the same basis as the particular item to which it relates.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except:
- the recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
- any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences.
Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Because the Company intends each year to qualify as an investment trust under Chapter 4 of Part 24 of the Corporation Tax Act 2010 (previously S842 of the Income and Corporation Taxes Act 1988), no provision is made for deferred taxation in respect of the capital gains that have been realised, or are expected in the future to be realised, on the sale of fixed asset investments.
(g) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged through the Income Statement as a revenue item except the following which are charged to capital:
- expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment; and
- the Company charges 75 per cent. of investment management fees to capital, in line with the Board’s expected long‑term return in the form of capital gains and income respectively from the investment portfolio of the Company. This split has been reassessed annually and remains appropriate. For further details refer to Note 3.
(h) Dividend payments
Dividends paid by the Company on its shares are recognised in the financial statements in the period in which they are paid and are shown in the Statement of Changes in Equity. Shares held in treasury carry no entitlement to dividends.
(i) Foreign currency
Transactions denominated in foreign currencies are recorded in the local currency at actual exchange rates at the date of the transaction. Overseas assets and liabilities denominated in foreign currencies at the year end are reported at the rates of exchange prevailing at the year end. Instruments held at fair value are translated at the rate prevailing at the time the fair value is determined.
Any gain or loss arising from a change in exchange rates subsequent to the date of a transaction and before the settlement date is included as an exchange gain or loss under the capital column of the Income Statement. The functional currency of the Company, being its statutory reporting currency, is pound sterling.
(j) Finance costs
Finance costs are accounted for on an accruals basis. Finance costs of debt, insofar as they relate to the financing of the Company’s investments or to financing activities aimed at maintaining or enhancing the value of the Company’s investments, are allocated between revenue and capital in accordance with the Board’s expected long-term split of returns, in the form of income and capital gains respectively, from the Company’s investment portfolio. For further details refer to Note 5.
(k) Capital and reserves
(i) Share capital – represents the nominal value of authorised and allocated, called-up and fully paid shares issued. The reserve is non-distributable.
(ii) Share premium – the surplus of net proceeds received from the issuance of new shares over their par value is credited to this account and the related issue costs are deducted from this account. The reserve is non-distributable.
(iii) Capital reserve – The following are accounted for in this reserve:
- gains and losses on the realisation of investments;
- realised and unrealised exchange differences on transactions of a capital nature;
- capitalised expenses and finance costs, together with the related taxation effect; and
- increases and decreases in the valuation of investments held.
This reserve, excluding the unrealised gains on Level 2 and Level 3 investments detailed in Note 9, is distributable by way of dividends.
(iv) Special distributable reserve – originally created from the Court cancellation of the share premium account which had arisen from premiums paid at launch. This reserve is distributable by way of dividends and has been used to facilitate reserve movements on share buybacks and issuances.
(v) Revenue reserve – the net profit/(loss) arising in the revenue column of the Income Statement is added to or deducted from this reserve. This reserve is distributable by way of dividends.
(vi) Treasury shares – shares that have been repurchased by the Company but not cancelled. These shares are held in a treasury account and remain part of the Company’s share capital but do not carry any rights to receive dividends or vote at general meetings. This reserve is non-distributable.
(vii) Capital redemption reserve – the nominal value of the Company’s own shares that have been bought back and cancelled. An amount equal to the nominal value of the shares cancelled is transferred from the share capital account to the capital redemption reserve in accordance with the Companies Act 2006. The reserve is non-distributable.
(l) Single segmental reporting
The Company is engaged in a single segment of business, being an investment business, and consequently no segmental analysis is provided.
(m) Critical accounting estimates and judgements
The only significant accounting estimate and judgement is the valuation of the unquoted investments which is described in Note 1(d) above.
The Company does not intend to acquire securities that are unquoted at the time of investment with the exception of securities which, at the time of acquisition, are intending to list on a stock exchange or securities which are convertible into quoted securities.
The Board delegates to a formal Valuation Committee (“VC”), which sits within the Company’s AIFM and meets on a monthly basis, the review of developments in relation to unquoted investments in the portfolio and the assessment of whether adjustments are required to reflect the fair value of the unquoted investments.
The valuation methodologies for unquoted investments are dependent on the type of instruments in the portfolio. For securities that have been delisted, fair value may be determined based on the expected future cash flow or the last price traded immediately prior to delisting, with appropriate illiquidity or similar discounts applied. Derivative instruments are fair valued using well established and commonly accepted techniques and models with inputs and assumptions determined by the VC. The Company uses the Black Scholes model for the valuation of warrants.
2 Income
|
|
2026 |
2026 |
2026 |
2025 |
2025 |
2025 |
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Income from investments |
|
|
|
|
|
|
|
UK dividend income |
165 |
– |
165 |
291 |
– |
291 |
|
Preference share dividend income |
253 |
– |
253 |
466 |
– |
466 |
|
Overseas dividend income |
1,260 |
2,648 |
3,908 |
1,596 |
1,324 |
2,920 |
|
Fixed interest |
135 |
– |
135 |
137 |
– |
137 |
|
|
1,813 |
2,648 |
4,461 |
2,490 |
1,324 |
3,814 |
|
Other income |
|
|
|
|
|
|
|
Bank interest |
95 |
– |
95 |
81 |
– |
81 |
|
Total income |
1,908 |
2,648 |
4,556 |
2,571 |
1,324 |
3,895 |
3 Investment Management Fees
|
|
2026 |
2026 |
2026 |
2025 |
2025 |
2025 |
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Investment management fee |
319 |
958 |
1,277 |
391 |
1,175 |
1,566 |
As at the Company’s year end, the Investment Manager was CQS (UK) LLP (trading as Manulife | CQS Investment Management).
The balance due to Manulife | CQS for management fees at the year end was £228,000 (2025: £252,000), which has been settled post year end.
Investment management fees have been allocated 75% to capital and 25% to revenue (2025: 75% capital and 25% revenue) in the Income Statement. This capital and revenue split is reviewed by the Board annually.
4 Other Expenses
|
|
2026 |
2026 |
2026 |
2025 |
2025 |
2025 |
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Secretarial and administration fees |
275 |
– |
275 |
266 |
– |
266 |
|
Directors’ fees |
161 |
– |
161 |
193 |
– |
193* |
|
Employer’s National Insurance contributions |
11 |
– |
11 |
14 |
– |
14 |
|
Auditor’s remuneration for the audit of the Company’s financial statements |
54 |
– |
54 |
63 |
– |
63 |
|
Tax advisor remuneration for tax services |
8 |
– |
8 |
72 |
– |
72 |
|
Directors’ and Officers’ liability insurance |
18 |
– |
18 |
19 |
– |
19 |
|
Registrar fees |
44 |
– |
44 |
39 |
– |
39 |
|
Custody and depositary fees |
76 |
– |
76 |
91 |
– |
91 |
|
Public relations |
85 |
– |
85 |
92 |
– |
92 |
|
Broker fees |
50 |
– |
50 |
50 |
– |
50 |
|
Stock exchange fees |
25 |
– |
25 |
29 |
– |
29 |
|
Legal and professional fees |
48 |
– |
48 |
826 |
– |
826** |
|
Other |
48 |
14 |
62 |
49 |
– |
49 |
|
|
903 |
14 |
917 |
1,803 |
– |
1,803 |
£183,000 of the operating expenses incurred during the period between the Calculation Date (30 June 2025) and the Tender Pool Determination Date (29 September 2025) were borne by the Tender Pool in line with the terms outlined within the Circular dated 28 May 2025, and the balances disclosed above for 2026 reflect the remaining ongoing trust only.
* Directors’ fees are higher in 2025 due to an overlap between the appointment of two new directors joining and the retiring of two directors from the Board, together with a one-off £15,000 payment to one of the Directors in compensation for the additional time and commitment given in respect of the Company’s response following receipt of a requisition notice from Saba Capital Management, L.P. on 18 December 2024. Further details can be found in the Directors Remuneration Report on page 50 of the Annual Report.
** Legal and professional fees in 2025 includes £714,000 in relation to the dealings of the Requisitioned General Meeting by Saba Capital Management, L.P. and the subsequent Strategic Review carried out by the Board. Subsequent to the year end and pursuant to Section 316 of the Companies Act 2006, £5,540 was reclaimed from Saba in respect of the circulation of its statement to shareholders alongside notice of the Requisitioned General Meeting held on 4 February 2025.
The Company does not have any employees and no pension contributions were payable in respect of any of the Directors. The Auditor’s remuneration for non-audit services amounted to £nil in 2026 (2025: £nil).
5 Finance Costs
|
|
2026 |
2026 |
2026 |
2025 |
2025 |
2025 |
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Interest on bank loan |
165 |
495 |
660 |
234 |
701 |
935 |
|
|
165 |
495 |
660 |
234 |
701 |
935 |
Interest on the bank loan has been allocated 75% to capital and 25% to revenue (2025: 75% capital and 25% revenue) in the Income Statement. This capital and revenue split is reviewed by the Board annually.
6 Taxation
|
|
2026 |
2026 |
2026 |
2025 |
2025 |
2025 |
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Overseas withholding tax |
81 |
67 |
148 |
143 |
25 |
168 |
|
|
81 |
67 |
148 |
143 |
25 |
168 |
Reconciliation of Tax Charge
The tax in the Income Statement for the year is lower than the current standard rate of corporation tax in the UK of 25% (2025: 25%). A reconciliation of the total tax charge is set out below:
|
|
2026 |
2025 |
|
|
Total |
Total |
|
|
£’000 |
£’000 |
|
Return on ordinary activities before taxation |
55,483 |
5,898 |
|
Corporation tax at 25% (2025: 25%) |
13,871 |
1,475 |
|
Effects of: |
|
|
|
Non-taxable income |
(420) |
(588) |
|
Non-taxable gains |
(14,085) |
(1,938) |
|
Overseas withholding tax |
148 |
168 |
|
Excess management expenses (deferred tax not recognised) |
656 |
1,022 |
|
Non-taxable exchange (losses)/gains |
(22) |
29 |
|
Current year tax charge |
148 |
168 |
The Company has not provided for deferred tax on capital gains or losses arising on the revaluation and disposal of investments as it is exempt from tax due to its investment trust status. The Company can offset excess management expenses (management fees, other administrative expenses, and interest costs) against taxable income to eliminate any tax charge on such income, but it is unlikely to generate future taxable profits to utilise these amounts. The unrecognised deferred tax assets as at 30 June 2026 totalled £6,127,000 (2025: £5,471,000) arising as a result of having excess management expenses of £24,509,000 (2025: £21,884,000) and based on a prospective tax rate of 25% (2025: 25%).
7 Dividends
|
|
2026 |
2025 |
|
|
£’000 |
£’000 |
|
Amounts recognised as distributions to equity holders in the year: |
|
|
|
Fourth interim dividend for the year ended 30 June 2025 of 4.25p (2024: 1.82p) per share |
1,480 |
1,198 |
|
Special interim dividend for the year ended 30 June 2025 of nil (2024: 1.00p) per share |
– |
659 |
|
First interim dividend for the year ended 30 June 2026 of 6.02p (2025: 1.26p) per share |
2,112 |
811 |
|
Second interim dividend for the year ended 30 June 2026 of 7.00p (2025: 1.26p) per share |
2,561 |
808 |
|
Third interim dividend for the year ended 30 June 2026 of 8.34p (2025: 1.26p) per share |
3,030 |
808 |
|
|
9,183 |
4,284 |
|
|
2026 |
2025 |
|
|
£’000 |
£’000 |
|
Amounts relating to the year but not paid at the year end*: |
|
|
|
Fourth interim dividend for the year ended 30 June 2026 of 6.94p (2025: 4.25p) per share |
2,510 |
1,480 |
|
Total |
2,510 |
1,480 |
* Figures under the 2026 column above are calculated using the number of voting shares (excluding shares held in treasury) in issue of 36,173,238 as at the record date of 24 July 2026, and the comparatives under the 2025 column were calculated using the number of voting shares (excluding shares held in treasury and tender shares) in issue of 34,824,874 as at the record date of 1 August 2025.
In accordance with FRS 102, the fourth interim dividends have not been included as a liability in these accounts and will be recognised in the period in which they are paid.
8 Return per ordinary share
Return per ordinary share attributable to shareholders reflects the overall performance of the Company in the year.
|
|
Year ended |
Year ended |
|
|
30 June |
30 June |
|
|
2026 |
2025 |
|
|
£’000 |
£’000 |
|
Revenue return |
440 |
– |
|
Capital return |
54,895 |
5,730 |
|
Total Return |
55,335 |
5,730 |
|
|
Year ended |
Year ended |
|
|
30 June |
30 June |
|
|
2026 |
2025 |
|
Weighted average number of ordinary shares in issue |
42,973,567 |
64,516,804 |
|
Revenue return per share (pence) |
1.02 |
0.00 |
|
Capital return per share (pence) |
127.75 |
8.88 |
|
Total return per share (pence) |
128.77 |
8.88 |
There were no dilutive instruments issued by the Company for the years ended 30 June 2026 and 30 June 2025.
9 Investments
|
|
2026 |
2025 |
|
|
£’000 |
£’000 |
|
Equity shares |
136,012 |
137,154 |
|
Preference shares |
2,641 |
4,580 |
|
Fixed income securities |
279 |
951 |
|
Warrants |
995 |
581 |
|
|
139,927 |
143,266 |
All investments are designated at fair value through profit or loss at initial recognition, therefore all gains and losses arising on investments are recognised in profit or loss.
Investments at fair value through profit or loss
|
|
2026 |
2025 |
|
|
£’000 |
£’000 |
|
Opening book cost |
142,707 |
162,667 |
|
Opening investment holding gains/(losses) |
559 |
(10,040) |
|
Opening fair value |
143,266 |
152,627 |
|
Analysis of transactions made during the year |
|
|
|
Purchase at cost |
55,918 |
38,167 |
|
Sales of investments - ongoing operation |
(47,467) |
(53,953) |
|
Sales of investments - tender offer |
(65,483) |
– |
|
Gains on investments |
53,693 |
6,425 |
|
Closing fair value |
139,927 |
143,266 |
|
Closing book cost |
96,178 |
142,707 |
|
Closing investment gains |
43,749 |
559 |
|
Closing fair value |
139,927 |
143,266 |
The gains and losses included in the table below have all been recognised within gains on investments held at fair value in the Income Statement.
|
|
2026 |
2025 |
|
Gains/(losses) on investments |
£’000 |
£’000 |
|
Realised gains/(losses) on sales of investments |
10,503 |
(4,174) |
|
Unrealised gains on investments |
43,190 |
10,599 |
|
Gains on investments |
53,693 |
6,425 |
During the year the Company purchased £55,918,000 (2025: £38,167,000) of investments and incurred a total transaction cost of £70,000 (2025: £23,000). Disposals of investments amounted to £112,950,000 (2025: £53,953,000), which includes £65,483,000 in relation to the tender offer (2025: nil), with a total transaction cost of £39,000, excluding those related to the tender offer (2025: £46,000). As at 30 June 2026, £nil of the disposal proceeds were receivable (2025: £4,000).
FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland requires an analysis of investments valued at fair value based on the reliability and significance of information used to measure their fair value. The level is determined by the lowest (that is the least reliable or independently observable) level of input that is significant to the fair value measurement for the individual investment in its entirety as follows:
- Level 1 – investments quoted in an active market;
- Level 2 – investments whose fair value is based directly on observable current market prices or indirectly being derived from market prices; and
- Level 3 – investments whose fair value is determined using a valuation technique based on assumptions that are not supported by observable current market prices or based on observable market data.
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
As at 30 June 2026 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Investments at fair value through profit or loss |
|
|
|
|
|
Equities |
135,580 |
– |
432 |
136,012 |
|
Preference shares |
2,641 |
– |
– |
2,641 |
|
Fixed income securities |
– |
264 |
15 |
279 |
|
Warrants |
– |
– |
995 |
995 |
|
Total |
138,221 |
264 |
1,442 |
139,927 |
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
As at 30 June 2025 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Investments at fair value through profit or loss |
|
|
|
|
|
Equities |
135,790 |
– |
1,364 |
137,154 |
|
Preference shares |
4,580 |
– |
– |
4,580 |
|
Fixed income securities |
– |
940 |
11 |
951 |
|
Warrants |
– |
– |
581 |
581 |
|
Total |
140,370 |
940 |
1,956 |
143,266 |
Level 2 investments are priced using evaluated prices from a third-party vendor, together with a price comparison made with secondary and tertiary evaluated third party sources. Evaluated prices are in turn based on a variety of sources, including broker quotes and benchmarks. As a result, these investments are disclosed as Level 2 as the fair values of these investments are not as visible as quoted equity investments and their higher inherent pricing risk. However, this does not mean that the fair values shown in the portfolio valuation are not achievable at point of sale.
There has been no transfer of financial assets between fair value levels during the year (2025: none).
The Level 3 investments at the year end, along with the respective valuation methods utilised, are as follows:
The fair value of Level 3 financial assets has been determined by reference to valuation techniques described in Note 1(d) of these Financial Statements. Judgement has been exercised in each of these valuations in determining the most appropriate valuation methodology and inputs into the valuation models used.
Unquoted equity investments:
As at 30 June 2026, the Company held one unquoted equity investment in Firefinch (£432,000), whose shares were delisted from the ASX on 1 July 2024 and is in the final stage of its liquidation. The investment is valued at expected liquidation proceeds and a 10% decrease in its valuation would result in a £43,000 negative impact on the Company’s net return for the year and NAV as at the year end date, and a 10% increase would result in an equal but opposite effect.
Unquoted warrants:
The Company’s investments in unquoted warrants are valued using the Black Scholes Model and the inputs into the model require judgements and estimates, which are detailed as follows:
- Volatility and time to maturity: for any warrants with a maturity greater than 1 year, the 90-day volatility is used and for any securities with a maturity less than 1 year, the 60-day volatility is used. These have been deemed appropriate periods to use, as often using the time to expiry has captured market or firm events that have artificially inflated the volatility which has, in turn, inflated the valuation. If the period used still yields an unreflective level of volatility, then the volatility period used is overridden. When appropriate to extend the period, the time to maturity is used, up to a maximum of 400 days, which is in line with Bloomberg’s option and warrant valuation model assumptions; and
-
Risk free rate: in determining the risk free rate, the swap price discount curve is used for the relevant currencies. The swap curve in the warrant currency is deemed an appropriate method for approximating the yield curve for the following reasons:
- there is sufficient liquidity and depth of pricing to provide reliable valuations for the Swap curves for the points and currencies that the Company currently requires;
- using Swaps allows for the same discount rate methodology to be used across the range of maturities of the Warrant portfolio, whereas using other instruments to construct a yield curve would typically be more limited across different tenors. This is relevant to the current portfolio as there is a wide range of time-to-maturities; and
- using Swaps allows for the same discount rate methodology to be used across different currencies, which is applicable to the Company’s current portfolio which contains warrants listed and traded in a range of currencies.
As at 30 June 2026, the fair value of warrants held by the Company was £995,000 (2025: £581,000). If the market value of the warrants were to fall by 10 per cent., the impact on the net return and the net asset value of the Company would be a reduction of £100,000 (2025: a reduction of £58,000). If the value of the Level 3 warrants were to rise by the same percentage, the effect on the Company’s net return and net asset value would be equal and opposite.
All other Level 3 securities, except for one bond instrument valued at £15,000 (2025: one bond instrument valued at £11,000), have been priced at nil in the absence of any indicators of higher value. There are normal voting rights attached to all Level 3 equity holdings which are directly proportionate to the percentage holding in the company.
10 Debtors
|
|
2026 |
2025 |
|
|
£’000 |
£’000 |
|
Prepayments and accrued income |
82 |
72 |
|
Overseas withholding tax recoverable |
13 |
252 |
|
VAT recoverable |
27 |
78 |
|
Other debtors |
– |
4 |
|
|
122 |
406 |
11 Creditors: Amounts Falling Due Within One Year
|
|
2026 |
2025 |
|
|
£’000 |
£’000 |
|
Other creditors |
501 |
578 |
|
Corporation tax |
122 |
122 |
|
|
623 |
700 |
Included within other creditors is £228,000 (2025: £252,000) due to the Investment Manager in respect of management fees.
Corporation tax liability relates to certain overseas dividend income recognised during the year ended 30 June 2009, which was treated as exempt for corporation tax following the ruling of the HMRC’s First Tier Tribunal in December 2021. The ruling was reversed by the Upper Tribunal in January 2024 and consequently the Company has recognised a tax liability of £122,000. An interest charge of £66,000 has been provided in respect of this tax liability. The actual amount is subject to HMRC confirmation, however, the Company believes that the interest exposure provided for is a conservative estimate and may not materialise.
12 Bank Loan
|
|
2026 |
2025 |
|
|
£’000 |
£’000 |
|
Bank loan |
14,500 |
9,000 |
As at the year end, the Company had a secured loan facility with BNP Paribas S.A., London Branch (“BNP”), on which drawdowns attracted an interest rate of Sterling Overnight Index Average (“SONIA”) plus 1.35%, and a commitment fee of 0.45%. The credit facility had a floating charge covering all the property or undertaking of the Company. As at 30 June 2026, £14.5 million was drawn down at an indicative rate of 5.07% fixed until 11 September 2026 (2025: £9 million was drawn down at an indicative rate of 5.6% fixed until 12 September 2025).
Covenant conditions under the BNP facility were as follows:
- the borrower shall not permit the net asset value to be less than £45 million;
- maximum loan to value ratio of 30%; and
- minimum coverage ratio (total adjusted total assets value over debt) of 1.
The loan facility was rolled over every three months and could be cancelled at any time.
On 11 September 2026, a new secured facility was agreed with The Bank of Nova Scotia, London Branch (“Scotiabank”) on an evergreen basis. The new facility has an initial commitment of £25 million with an option to extend a further £10 million at the Company’s request. Drawdowns from the facility attract an interest rate of SONIA plus a 1% margin and a commitment fee of 0.35%.
Covenants conditions under the Scotiabank facility include a minimum net asset value of no less than £60 million at any time and a minimum coverage ratio (adjusted total net assets over debt) of 3.33 to 1.
As at the date this Report was approved, £9.5 million was drawn down under this facility at an indicative rate of 4.73%.
13 Share Capital
|
|
2026 |
2025 |
|
|
£’000 |
£’000 |
|
Allotted, called up and fully-paid: |
|
|
|
36,210,418 (2025: 64,157,838) ordinary shares of 25p each |
9,053 |
16,039 |
|
10,144,032 (2025: 2,605,671) ordinary shares held in treasury |
2,536 |
683 |
|
46,354,450 (2025: 66,888,509) total ordinary shares of 25p each |
11,589 |
16,722 |
In early October 2025, the Company completed the Tender Offer announced in July 2025, which resulted in 29,334,059 ordinary shares being repurchased by the Company, 8,800,000 of those shares were kept in treasury and the remaining 20,534,059 shares were cancelled. Other than the buyback of shares under the Tender Offer, the Company has bought back 763,361 shares to be held in treasury at a cost of £2,730,000 (2025: 2,002,114 shares at £3,636,000) and issued 2,150,000 shares from treasury for total proceeds of £8,247,000 during the year (2025: no shares issued).
Between 1 July 2026 and 23 October 2026, the latest practicable date prior to the publication of this Report, the Company sold 3,965,000 shares from treasury and bought back a further 37,180 shares into treasury at a cost of £121,730. As at 23 October 2026 the Company had 46,354,450 shares in issue, including 6,216,212 shares held in treasury.
Capital management policies and procedures
The Company’s capital management objectives are:
- to ensure that the Company will be able to continue as a going concern; and
- to maximise the capital return to its equity shareholders through an appropriate balance of equity capital and debt. The Company’s Investment Policy limits gearing to 25% of net assets. The highest level of gearing during the course of the year was 13.4% (2025: 14.0%) and it was 10.9% at 30 June 2026 (2025: 4.8%).
The capital of the Company is managed in accordance with its Investment Policy detailed in the Business Review, and the details of the Company’s reserves are shown in the Statement of Changes in Equity.
The Board monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This review includes the nature and planned level of gearing, which takes account of the Investment Manager’s views on the market, and the extent to which revenue in excess of that which is required to be distributed should be retained. The Company has no externally imposed capital requirements.
14 Net Asset Value per ordinary share
The net asset value per ordinary share is based on net assets of £125,718,000 (2025: £136,376,000) and on 36,210,418 (2025: 64,157,838) ordinary shares in issue, being the number of ordinary shares in issue, excluding shares held in treasury, at the year end.
There were no dilutive instruments issued by the Company for the years ended 30 June 2026 and 30 June 2025.
15 Financial Instruments
The Company’s financial instruments comprise its investment portfolio, cash balances, bank facilities, debtors and creditors that arise directly from its operations. As an investment trust, the Company holds a portfolio of financial assets in pursuit of its investment objective. The Company can make use of flexible borrowings for short-term purposes to achieve improved performance in rising markets and to seek to enhance the returns to shareholders, when considered appropriate by the Investment Manager. The downside risk of borrowings may be reduced by raising the level of cash balances held.
Financial assets designated at fair value through profit or loss (see Note 9) are measured at fair value. For actively traded listed securities, fair value is considered to be equivalent to the most recent available bid price. Where listed securities are not actively traded, multiple broker quotes are referenced to estimate fair value. For unlisted securities, fair value is determined by the Board using valuation techniques based on unobservable inputs. The fair value of other receivables, cash, and other payables is represented by their carrying value in the Balance Sheet. These are short-term financial assets and liabilities whose carrying value approximate fair value.
The main risks that the Company faces arising from its financial instruments are:
(i) market price risk, being the risk that the value of investment holdings will fluctuate as a result of changes in market prices caused by factors other than interest rate or currency rate movements;
(ii) interest rate risk, being the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates;
(iii) foreign currency risk, being the risk that the value of investment holdings, investment purchases, investment sales and income will fluctuate because of movements in currency rates;
(iv) credit risk, being the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company; and
(v) liquidity risk, being the risk that the bank may demand repayment of a loan or that the Company may not be able to quickly liquidate its investments.
Financial assets and liabilities
The financial assets and liabilities of the Company are as follows:
|
|
2026 |
2025 |
|
|
£’000 |
£’000 |
|
Financial assets |
|
|
|
Investments |
139,927 |
143,266 |
|
Cash at bank |
961 |
2,404 |
|
Accrued income |
43 |
50 |
|
Other debtors |
79 |
356 |
|
Financial liabilities |
|
|
|
Bank loan |
14,500 |
9,000 |
|
Bank overdraft |
169 |
– |
|
Other creditors |
623 |
700 |
The bank loan balance was due for renewal on 11 September 2026 (2025: 12 September 2025) and the related interest payable until renewal was £147,000 (2025: £124,000).
Market price risk
Market price risk arises mainly from uncertainty about future prices of financial instruments held. It represents the potential loss the Company might suffer through holding market positions in the face of price movements. To mitigate the risk the Investment Manager’s investment strategy is to select investments for their fundamental value. Stock selection is therefore based on disciplined accounting, market and sector analysis, with the emphasis on long-term investments. An appropriate spread of investments is held in the portfolio in order to reduce both the statistical risk and the risk arising from factors specific to a country or sector. The Investment Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly, in order to consider investment strategy.
Investment and portfolio performance are discussed in more detail in the Investment Manager’s Review and further information on the investment portfolio is set out above.
If the investment portfolio valuation were to fall by 5% at 30 June 2026 (2025: 5%), the impact on the profit or loss and the net asset value would be a reduction of £6,996,000 (2025: a reduction of £7,163,000). If the investment portfolio valuation were to rise by 5% the impact would be equal and opposite. The calculations are based on the portfolio valuation as at the respective balance sheet dates and are not representative of the year as a whole and may not be reflective of future market conditions. A 5% sensitivity has been selected as this level of change is considered to be reasonable based on observations of post year end performance of the portfolio investments.
Interest rate risk
Financial assets
Fixed, floating rate and preference share yields and their prices are determined by market perception as to the appropriate level of yields given the economic background. Key determinants include economic growth prospects, inflation, the Government’s fiscal position, short-term interest rates and international market comparisons. The Investment Manager takes all these factors into account when making any investment decisions as well as considering the financial standing of the potential investee company.
Interest rates on fixed income instruments are fixed at the time of purchase, as the fixed coupon payments are known, as are the final redemption proceeds. Consequentially, if a fixed income instrument is held until its redemption date, the total return achieved is unaltered from its purchase date. However, over the life of a fixed income instrument the market price at any given time will depend on the market environment at that time. Therefore, a fixed income instrument sold before its redemption date is likely to have a different price from its purchase level and a profit or loss may be incurred.
Interest rates on floating rate instruments vary throughout the life of the instrument based on movements in the applicable underlying base rate. Consequentially, the total return achieved on these positions changes throughout the life of the position. In addition, over the life of the financial instrument, the market price of such instruments will depend on the market environment at that time. Therefore, a floating rate instrument sold before its redemption date is likely to have a different price from its purchase level and a profit or loss may be incurred.
Interest rates on floating rate instruments vary throughout the life of the instrument based on movements in the applicable underlying base rate. Consequentially, the total return achieved on these positions changes throughout the life of position. In addition, over the life of the financial instrument, the market price of such instruments will depend on the market environment at that time. Therefore, a floating rate instrument sold before its redemption date is likely to have a different price from its purchase level and a profit or loss may be incurred. Bond yields, and their prices, are determined by market perception as to the appropriate level of yields given the economic background. Key determinants include economic growth prospects, inflation, the Government’s fiscal position, short-term interest rates and international market comparisons.
Returns from bonds are fixed at the time of purchase, as the fixed coupon payments are known, as are the final redemption proceeds.
The Company’s exposure to floating interest rates gives rise to cash flow interest rate risk and its exposure to fixed interest rates gives rise to fair value interest rate risk. Interest rate risk on fixed rate interest instruments is considered to be part of market price risk as disclosed above.
If the bank base rate were to increase by 1%, the impact on the Company’s net return and NAV would be a reduction of £137,000 (2025: a reduction of £66,000). If the bank base rate were to decrease by 1%, the impact on the profit or loss would be equal and opposite. The calculations are based on borrowings as at the respective balance sheet dates and are not representative of the year as a whole.
Floating rate
When the Company retains cash balances they are held in floating rate deposit accounts. The benchmark rate which determines the interest payments received on cash balances, is the bank base rate for the relevant currency for each deposit.
Financial liabilities
The Company may utilise drawdowns from the credit facility, which provides borrowings in pound sterling at a variable rate based on the SONIA rate. The Board sets borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis.
Fixed rate
The Company holds fixed interest investments and the interest rate profiles are as follows:
|
|
|
|
2026 |
|
|
2025 |
|
|
|
|
Weighted |
|
|
Weighted |
|
|
|
2026 |
average |
|
2025 |
average |
|
|
|
Weighted |
period for |
|
Weighted |
period for |
|
|
|
average |
which the |
|
average |
which the |
|
|
2026 |
interest |
rate is fixed |
2025 |
interest |
rate is fixed |
|
|
£’000 |
rate (%)* |
(years) |
£’000 |
rate (%)* |
(years) |
|
Assets: |
|
|
|
|
|
|
|
Fixed income securities |
279 |
6.6 |
1.4 |
951 |
7.6 |
0.7 |
* The “weighted average interest rate” is based on the current yield of each asset, weighted by their market value.
Foreign currency risk
The Company invests in overseas securities and may hold foreign currency cash balances which give rise to currency risks. The Company does not hedge its currency exposure and, as a result, the movement of exchange rates between pound sterling and the other currencies in which the Company’s investments are denominated may have a material favourable or unfavourable effect on the returns generated by the Company’s investments. Although the Investment Manager may seek to manage all or part of the Company’s foreign exchange exposure, there is no assurance that this can be performed effectively.
The Company’s foreign currency exposure as at 30 June 2026 and 30 June 2025 were as follows:
|
|
|
|
|
|
Sensitivity |
Sensitivity |
|
|
|
|
|
|
Impact |
Impact |
|
|
|
|
Net |
|
sterling |
sterling |
|
|
|
|
current |
|
weakens |
strengthens |
|
|
Investments |
Cash |
assets |
Total |
by 5% |
by 5% |
|
30 June 2026 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Canadian dollar |
59,050 |
22 |
16 |
59,088 |
3,110 |
(2,814) |
|
Australian dollar |
30,868 |
67 |
45 |
30,980 |
1,630 |
(1,475) |
|
US dollar |
29,436 |
26 |
– |
29,462 |
1,551 |
(1,403) |
|
Norwegian krone |
5,656 |
(169) |
– |
5,487 |
289 |
(261) |
|
Euro |
– |
27 |
83 |
110 |
6 |
(5) |
|
Brazilian real |
– |
105 |
– |
105 |
6 |
(5) |
|
|
125,010 |
78 |
144 |
125,232 |
6,592 |
(5,963) |
|
|
|
|
|
|
Sensitivity |
Sensitivity |
|
|
|
|
|
|
Impact |
Impact |
|
|
|
|
Net |
|
sterling |
sterling |
|
|
|
|
current |
|
weakens |
strengthens |
|
|
Investments |
Cash |
assets |
Total |
by 5% |
by 5% |
|
30 June 2025 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Canadian dollar |
51,040 |
4 |
32 |
51,076 |
2,688 |
(2,432) |
|
Australian dollar |
40,939 |
55 |
4 |
40,998 |
2,158 |
(1,952) |
|
US dollar |
25,998 |
64 |
80 |
26,142 |
1,376 |
(1,245) |
|
Norwegian krone |
7,680 |
7 |
– |
7,687 |
405 |
(366) |
|
Euro |
– |
6 |
127 |
133 |
7 |
(6) |
|
|
125,657 |
136 |
243 |
126,036 |
6,634 |
(6,001) |
If the value of pound sterling were to strengthen against the foreign currencies the portfolio is exposed to by 5%, the impact on the Company’s net return and the net asset value would be a reduction of £5,963,000 (2025: a reduction of £6,001,000). If the value of pound sterling were to weaken by the same amount, the impact on the Company’s net return and the net asset value would have been an increase of £6,592,000 (2025: an increase of £6,634,000). The calculations are based on the portfolio valuation, cash balances and net current assets/(liabilities) as at the respective balance sheet dates and are not representative of the year as a whole and may not be reflective of future market conditions.
A 5% sensitivity has been selected as this level of change is considered to be reasonable based on observations of current market conditions.
The Investment Manager does not intend to hedge the Company’s foreign currency exposure at the present time.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Investment Manager has in place a monitoring procedure in respect of counterparty risk which is reviewed on an ongoing basis. The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date.
At the reporting date, the Company’s financial assets exposed to credit risk amounted to the following:
|
|
2026 |
2025 |
|
|
£’000 |
£’000 |
|
Fixed interest investments |
279 |
951 |
|
Cash at bank |
961 |
2,404 |
|
Interest, dividends and other receivables |
122 |
406 |
|
|
1,362 |
3,761 |
As at 30 June 2026 and as at 30 June 2025 there were no debtors that were overdue.
Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions is considered to be small due to the short settlement period involved and the high credit quality of the brokers used. The Board monitors the quality of service provided by the brokers used to further mitigate this risk.
As at 30 June 2026, the cash held by the Company and all the assets of the Company which are traded on a recognised exchange were held by BNP Paribas, the Company’s custodian. Bankruptcy or insolvency of the custodian may cause the Company’s rights with respect to securities held by the custodian to be delayed or limited. The Board monitors the Company’s risk by reviewing the custodian’s internal control reports. Should the credit quality or the financial position of BNP Paribas deteriorate significantly, the Investment Manager will move the cash holdings to another bank.
The latest credit ratings for BNP Paribas are: A+ by Standard & Poor’s, AA- by Fitch and A2 rated by Moody’s.
There were no significant concentrations of credit risk to counterparties as at 30 June 2026 and as at 30 June 2025. The Company’s largest single holding represented 5.4% of its total investments as at 30 June 2026 (2025: 8.2%).
Liquidity risk
The Company’s liquidity risk is managed on an ongoing basis by the Investment Manager in accordance with policies and procedures in place as described in the Directors’ Report. The Company’s overall liquidity risks are monitored on a quarterly basis by the Board. The Company maintains sufficient cash and readily realisable securities to pay accounts payable and accrued expenses.
The contractual maturities of the financial liabilities at each Balance Sheet date, based on the earliest date on which payment can be required, were as follows:
|
|
|
More than |
|
|
|
|
Three |
three months |
|
|
|
|
months |
but less than |
More than |
|
|
|
or less |
one year |
one year |
Total |
|
30 June 2026 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Current liabilities |
501 |
– |
– |
501 |
|
Bank overdraft |
169 |
– |
– |
169 |
|
Bank loan |
14,500 |
– |
– |
14,500 |
|
|
15,170 |
– |
– |
15,170 |
The bank loan balance represents drawdowns from the loan facility detailed in Note 12 and was rolled over every three months.
|
|
|
More than |
|
|
|
|
Three |
three months |
|
|
|
|
months |
but less than |
More than |
|
|
|
or less |
one year |
one year |
Total |
|
30 June 2025 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Current liabilities |
700 |
– |
– |
700 |
|
Bank loan |
9,000 |
– |
– |
9,000 |
|
|
9,700 |
– |
– |
9,700 |
16 Net Debt Reconciliation
|
|
As at |
Currency |
|
As at |
|
|
30 June 2025 |
differences |
Cash flows |
30 June 2026 |
|
|
£’000 |
£’000 |
£’000 |
£’000 |
|
Cash at bank net of overdraft balance |
2,404 |
88 |
(1,700) |
792 |
|
Bank loan |
(9,000) |
– |
(5,500) |
(14,500) |
|
|
(6,596) |
88 |
(7,200) |
(13,708) |
|
|
As at |
Currency |
|
As at |
|
|
30 June 2024 |
differences |
Cash flows |
30 June 2025 |
|
|
£’000 |
£’000 |
£’000 |
£’000 |
|
Cash at bank |
2,952 |
(118) |
(430) |
2,404 |
|
Bank loan |
(17,000) |
– |
8,000 |
(9,000) |
|
|
(14,048) |
(118) |
7,570 |
(6,596) |
17 Significant Interests
The following investments are considered significant holdings as the Company owns 3% or more of the relevant investee company’s issued share capital.
|
|
Valuation |
Ownership |
|
Investments as at 30 June 2026 |
£’000 |
% |
|
REA Holdings 9% 31/12/49 |
2,641 |
3.9 |
|
Castile Resources |
447 |
3.1 |
|
Greenlight Metals |
382 |
3.0 |
|
|
Valuation |
Ownership |
|
Investments as at 30 June 2025 |
£’000 |
% |
|
REA Holdings 9% 31/12/49 |
4,581 |
7.2% |
|
True North Copper |
893 |
3.5% |
|
Cosa Resources |
330 |
3.4% |
|
Castile Resources |
316 |
4.1% |
18 Related Party Transactions and Transactions with the Investment Manager
The Directors are considered related parties to the Company.
There are no transactions with the Directors other than remuneration for services as Directors as disclosed in the Directors’ Remuneration Report on pages 49 to 51 of the Annual Report, and as set out in Note 4. The beneficial interests of the Directors in the ordinary shares of the Company are disclosed on page 50 of the Annual Report.
No balance was due to Directors for fees at the year end (2025: £nil).
Details of the fee arrangement with the Investment Manager are included in Note 3.
19 Post Balance Sheet Events
Change of Investment Manager and AIFM, Custodian and Depositary and the Company name
As announced during the year, and explained in more detail in the Chairman’s Statement, Tufton Investment Management Ltd (“Tufton”) was appointed as investment manager and Keith Watson and Robert Crayfourd resumed as the Company’s named portfolio managers with effect 14 September 2026. The transition has completed post year end on the expected effective date.
The Company’s depositary and custodian changed from BNP Paribas S.A. to Apex Depositary (UK) Limited and European Depositary Bank SA, Dublin Branch (subcontracted to Citibank N.A., London Branch) respectively with effect from 14 September 2026.
With effect from 15 September 2026, the Company changed its name from CQS Natural Resources Growth and Income PLC to City Natural Resources Growth and Income PLC.
There are no other post balance sheet events which require adjustment of or disclosure in the Financial Statements.
Glossary of Terms and Definitions
|
AIC |
Association of Investment Companies. The AIC represents a broad range of investment companies, investment trusts, VCTs and other closed-ended funds. |
|||||||||||||||
|
UK Alternative Investment Fund Managers Directive (“UK AIFMD”) |
Agreed by the European Parliament and the Council of the European Union and transposed into UK legislation, the AIFMD classifies certain investment vehicles, including investment companies, as Alternative Investment Funds (“AIF”s) and requires them to appoint an Alternative Investment Fund Manager (“AIFM”) and depositary to manage and oversee the operations of the investment vehicle. The Board of the Company retains responsibility for strategy, operations and compliance and the Directors retain a fiduciary duty to shareholders. |
|||||||||||||||
|
Alternative Performance Measure (“APM”) |
A financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework. |
|||||||||||||||
|
Dividend Yield (APM) |
The annual dividend expressed as a percentage of the share price. |
|||||||||||||||
|
|
Year ended |
Year ended |
||||||||||||||
|
|
30 June 2026 |
30 June 2025 |
||||||||||||||
|
Total non-special interim dividends paid and declared (pence) |
28.30 |
8.03 |
||||||||||||||
|
Closing share price (pence) |
343.00 |
199.50 |
||||||||||||||
|
Dividend yield |
8.3% |
4.0% |
||||||||||||||
|
|
|
|
||||||||||||||
|
Gearing (APM) |
Net debt (bank loan net of cash) as a percentage of net asset value. Gearing amplifies the impact of gains or losses on the net asset value of the Company. It can be positive for a company’s performance, although it can have negative effects on performance when underlying assets fall in value. It is the Company’s policy to determine the adequate level of gearing appropriate to its own risk profile. The Company may borrow an amount up to 25 per cent. of shareholders’ funds (measured at the time of drawdown). Gearing is calculated in accordance with guidance from the AIC as follows: |
|||||||||||||||
|
|
Year ended |
Year ended |
||||||||||||||
|
|
30 June 2026 |
30 June 2025 |
||||||||||||||
|
|
£’000 |
£’000 |
||||||||||||||
|
Cash at bank (net of overdraft) |
792 |
2,404 |
||||||||||||||
|
Bank loan |
(14,500) |
(9,000) |
||||||||||||||
|
Net debt |
(13,708) |
(6,596) |
||||||||||||||
|
Net asset value |
125,718 |
136,376 |
||||||||||||||
|
Gearing |
10.9% |
4.8% |
||||||||||||||
|
|
||||||||||||||||
|
Net Asset Value (“NAV”) |
The value of total assets less all liabilities of the Company. Liabilities for this purpose include current and long-term liabilities. |
|||||||||||||||
|
NAV per share (APM) |
NAV per ordinary share is calculated by dividing total net asset value by the total number of ordinary shares in issue (excluding shares held in treasury). |
|||||||||||||||
|
NAV per share Capital Return (APM) |
The movement between opening NAV per share (212.56p) and closing NAV per share (347.19p), which shows the capital return element (without the impact of dividend reinvestment) of the Company’s NAV per share during the year. |
|||||||||||||||
|
NAV per share Total Return (APM) |
The theoretical total return on an investment over a specified period assuming dividends paid to shareholders are reinvested at net asset value per share at the time the shares were quoted ex-dividend. This is a way of measuring investment management performance of investment companies which is not affected by movements in discounts or premiums. The Directors regard the Company’s net asset value total return per share as being the overall measure of value delivered to shareholders over the long term. |
|||||||||||||||
|
|
|
Year to |
Year to |
3 Years to |
5 Years to |
|
||||||||||
|
|
30 June |
30 June |
30 June |
30 June |
Since |
|||||||||||
|
|
2026 |
2025 |
2026 |
2026 |
inception |
|||||||||||
|
Opening NAV per share (pence) |
212.56 |
209.44 |
204.16 |
172.40 |
53.15 |
|||||||||||
|
Closing NAV per share (pence) |
347.19 |
212.56 |
347.19 |
347.19 |
347.19 |
|||||||||||
|
Percentage change in NAV per share |
63.3% |
1.5% |
70.1% |
101.4% |
553.2% |
|||||||||||
|
Impact of dividend reinvestment |
13.2% |
3.2% |
28.1% |
46.1% |
720.3% |
|||||||||||
|
NAV per Share Total Return |
76.6% |
4.6% |
98.2% |
147.5% |
1,273.6% |
|||||||||||
|
|
|
|
|
|
|
|||||||||||
|
Ongoing Charges Ratio (APM) |
A measure of all operating costs incurred in the reporting period, calculated as a percentage of average net assets in that year. Operating costs exclude costs incurred within underlying investee funds, costs of buying and selling investments, interest costs, taxation and the costs of buying back or issuing ordinary shares. |
|||||||||||||||
|
|
||||||||||||||||
|
|
Year ended |
Year ended |
||||||||||||||
|
|
30 June 2026 |
30 June 2025 |
||||||||||||||
|
Total expenses (per Note 3 and 4) (£’000) |
2,180 |
3,369 |
||||||||||||||
|
Less non-recurring expenses – Strategic Review (£’000) |
– |
(714) |
||||||||||||||
|
Ongoing expenses (£’000) |
2,180 |
2,655 |
||||||||||||||
|
Average net assets value (£’000) |
124,952 |
131,290 |
||||||||||||||
|
Ongoing charges ratio |
1.7% |
2.0% |
||||||||||||||
|
|
|
|
||||||||||||||
|
Share Price Capital Return |
The movement between opening share price (199.50p) and closing share price (343.00p), which shows the capital return element (without the impact of dividend reinvestment) of the Company’s share price during the year. |
|||||||||||||||
|
Share Price Total Return (APM) |
The change in capital value of a company’s shares over a given time period, plus dividends paid to shareholders, expressed as a percentage of the opening value. The assumption is that dividends paid to shareholders are re-invested in the shares at the time the shares are quoted ex-dividend. The Directors regard the Company’s share price total return to be a key indicator of performance. This reflects share price growth of the Company which the Board recognises is important to investors. |
|||||||||||||||
|
|
||||||||||||||||
|
|
Year to |
Year to |
3 Years to |
5 Years to |
|
|||||||||||
|
|
30 June |
30 June |
30 June |
30 June |
Since |
|||||||||||
|
|
2026 |
2025 |
2026 |
2026 |
inception |
|||||||||||
|
Opening share price (pence) |
199.50 |
189.00 |
169.50 |
160.50 |
52.50 |
|||||||||||
|
Closing share price (pence) |
343.00 |
199.50 |
343.00 |
343.00 |
343.00 |
|||||||||||
|
Percentage change in share price |
71.9% |
5.6% |
102.4% |
113.7% |
553.3% |
|||||||||||
|
Impact of dividend reinvestment |
15.1% |
3.7% |
37.1% |
55.7% |
887.2% |
|||||||||||
|
Share Price Total Return |
87.0% |
9.3% |
139.5% |
169.4% |
1,440.5% |
|||||||||||
|
|
|
|
|
|
|
|||||||||||
|
Share Price Discount or Premium to NAV per share (APM)
|
The amount by which the market price per share of an investment trust is lower or higher than the net asset value per share. The discount or premium is normally expressed as a percentage of the net asset value per share. If the share price is higher than the net asset value per share the result is a premium. If the share price is lower than the net asset value per share, the shares are trading at a discount. The Board regularly reviews the level of the discount/premium of the Company’s share price to the net asset value per share and considers ways in which share price performance may be enhanced, including the effectiveness of share buybacks, where appropriate. |
|||||||||||||||
|
|
|
|
Year ended |
Year ended |
||||||||||||
|
|
|
|
30 June 2026 |
30 June 2025 |
||||||||||||
|
|
Closing NAV per share (pence) |
|
347.19 |
212.56 |
||||||||||||
|
|
Closing share price (pence) |
|
343.00 |
199.50 |
||||||||||||
|
|
Share price discount to NAV per share |
|
1.2% |
6.1% |
||||||||||||
|
TCFD |
The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (“TCFD”) to improve and increase reporting of climate-related financial information. |
|||||||||||||||
|
Treasury shares |
Shares previously issued by a company that have been bought back from shareholders to be held by the company for potential re-issuance or cancellation at a later date. Shares held in treasury do not carry voting rights or rights to dividends. |
|||||||||||||||
The figures and financial information for 2026 are extracted from the Annual Report and financial statements for the year ended 30 June 2026 and do not constitute the statutory accounts for the year. The Annual Report and financial statements for the year ended 30 June 2026 include the Report of the Independent Auditor which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The Annual Report and financial statements have not yet been delivered to the Registrar of Companies.
The figures and financial information for 2025 are extracted from the published Annual Report and financial statements for the year ended 30 June 2025 and do not constitute the statutory accounts for that year. The Annual Report and financial statements for the year ended 30 June 2025 have been delivered to the Registrar of Companies and included the Report of the Independent Auditor which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.
- ENDS –
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
For further information please contact:
Administrator and Company Secretary
Frostrow Capital LLP
Tasmin Arthurton
Email: cosec@frostrow.com
Tel: 0203 709 2408
Investment Manager
Tufton Investment Management Ltd
Kael O'Sullivan
Email: cyn@tufton.com
Tel: 0207 518 6722
Public Relations
Tavistock Communications Limited
Gareth Tredway
Email: cyn@tavistock.co.uk
Tel: 020 7920 3150
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
Latest directors dealings
- 2 days ago City of London Investment Group
- 2 days ago Aberdeen Group plc
- 2 days ago NATWEST GROUP
- 2 days ago Ondo Insurtech
- 2 days ago Banco Santander S.A.