REG - CQS Natural Res - Annual Financial Report - year ended 30 June 2025
28/10/2025 07:00
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RNS Number : 0159F CQS Natural Resources Grwth&Inc PLC 28 October 2025
CQS Natural Resources Growth and Income PLC (the "Company")
Annual Financial Report for the year ended 30 June 2025
This announcement contains regulated information
The statements below are extracted from the Company's Annual Report for the
year ended 30 June 2025 (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 end of October 2025. 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://ncim.co.uk/cqs-natural-resources-growth-and-income-plc/
(https://ncim.co.uk/cqs-natural-resources-growth-and-income-plc/) 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
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
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.
Strategic Report
Key Metrics
for the year ended 30 June:
Net asset value total return(1) Share price total return(1)
2025 2025
2024 2024
4.6% 9.3%
7.2% 17.1%
MSCI World Metals and Mining Index total return (sterling adjusted)(2) MSCI World Energy Index total return (sterling adjusted)(2)
2025 2025
2024 2024
(4.5)% (7.7)%
7.3% 17.4%
Dividend yield(1,3) Dividend per share (pence)
2025 2025
2024 2024
4.0% 8.03p
3.0% 6.60p
Total return performance (cumulative)
1 Year 3 Years 5 Years Since
inception*
Net asset value per share 4.6% 16.1% 155.8% 677.8%
Share price 9.3% 27.7% 206.8% 723.6%
MSCI World Metals and Mining Index (sterling adjusted)(3) (4.5)% 15.5% 62.5% 457.8%
MSCI World Energy Index (sterling adjusted)(3) (7.7)% 18.6% 128.6% 491.4%
* 31 July 2003.
1 Alternative Performance Measure ("APM"). A glossary of the terms used,
including alternative performance measures, can be found on pages 88 to 90 of
the Annual Report.
2 Used by the Company as a comparator, not a benchmark. As at 30 June
2025, 72.2% of the portfolio was attributable to the MSCI World Metals and
Mining Index and 13.5% of the portfolio to the MSCI World Energy Index. Please
refer to the 'by commodity' illustration on page 18 of the Annual Report for
further detail.
3 Based on an annualised dividend of 8.03 pence per share (2024:
annualised dividend, excluding special dividend, of 5.60 pence per share).
Performance Record
Year ended Year ended Five years
30 June 2025 30 June 2024 ended
30 June 2025
Total Return
Net asset value per share(1) 4.6% 7.2% 155.8%
Share price (mid market)(1) 9.3% 17.1% 206.8%
( )MSCI World Metals and Mining Index (sterling adjusted)(2) (4.5)% 7.3% 62.5%
MSCI World Energy Index (sterling adjusted)(2) (7.7)% 17.4% 128.6%
As at As at % change
30 June 2025 30 June 2024
Capital Values
Net asset value per share(1) 212.56p 209.44p 1.5%
Share price (mid market) 199.50p 189.00p 5.6%
Share price discount to NAV per share(1) 6.1% 9.8%
Gearing(1) 4.8% 10.1%
Year ended Year ended % change
30 June 2025 30 June 2024
Revenue Earnings and Dividends
Earnings per share 0.00p 6.39p (100.0)%
Dividends per share 8.03p 6.60p(3) 21.7%
Dividend yield(1,4) 4.0% 3.0%
Ongoing charges ratio(1) 2.0% 1.9%
1 Alternative Performance Measure ("APM"). A glossary of the terms used,
including alternative performance measures, can be found on pages 88 to 90 of
the Annual Report.
2 The Company uses the MSCI World Energy Index (sterling adjusted) and
MSCI World Metals and Mining Index (sterling adjusted) as comparator indices,
not formal benchmarks, for its performance.
3 Including a special interim dividend of 1 penny which was paid on 2
September 2024.
4 Based on an annualised dividend of 8.03 pence per share (2024: annualised
dividend, excluding special dividend, of 5.60 pence per share).
Highest Lowest
Highs and Lows during the year ended 30 June 2025
Net asset value per share 228.95p 176.08p
Share price (mid market) 216.00p 165.75p
Discount (positive = premium) (14.2)% 2.0%
Dividend Ex-dividend date Record date Payment date
per share
Dividend History
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
Special interim dividend 2024 1.00p 1 August 2024 2 August 2024 2 September 2024
Fourth interim dividend 2024 1.82p 1 August 2024 2 August 2024 2 September 2024
Third interim dividend 2024 1.26p 25 April 2024 26 April 2024 28 May 2024
Second interim dividend 2024 1.26p 25 January 2024 26 January 2024 23 February 2024
First interim dividend 2024 1.26p 26 October 2023 27 October 2023 27 November 2023
Total for year ended 30 June 2024 6.60p
Chairman's Statement
The Company is in good shape to create further value with a clear,
uninterrupted pathway for growth. The supportive trends in the natural
resources sector provide significant tailwinds for investors. We look forward
to our future and thank our shareholders for their support.
Overview
Reflecting on the year ended 30 June 2025, my Board colleagues and I are very
pleased that the Company can continue with the investment strategy unchanged
and with a supportive shareholder base. We, alongside the Investment Manager,
believe that the investment strategy can deliver further outperformance
relative to the Company's comparator indices, given the flexibility to
maximise allocation, and capitalising on the opportunities arising around
broader macro trends.
Together with the commentary which follows, I would like to draw shareholders'
attention to the timeline of events set out on page 7 of the Annual Report
which I hope is helpful in aiding an understanding of the events which have
developed during the Company's financial year and to date.
I invite shareholders to read the Investment Manager's Review for the team's
views on your Company's investments, an update on the current position and an
outlook for the year ahead and the longer-term future of your Company.
However, this overview would not be complete without some observations on the
recent performance of your Company.
Through an approach of analysing top-down macroeconomic trends, the portfolio
managers increased the weighting in precious metals and that has led to very
successful results. The uplift in the value of uranium miners has also added
to the Company's NAV. This top-down approach, coupled with bottom-up stock
analysis, has contributed to another period of outperformance of our
comparator indices.
At the time of writing, the share price was 266 pence compared with 203 pence
immediately after the General Meeting held on 25 June. Further, I am pleased
to report that, having traded at a sustained premium, the Company has recently
been able to sell, effectively re-issuing, shares from treasury. It is
gratifying to see the shareholders who chose to remain invested in the Company
rewarded.
Shareholder Activity and Strategic Review
During the year, the Board was served with two notices requisitioning general
meetings by a major shareholder of the Company, Saba Capital Management, L.P.
("Saba"). The Company duly held a General Meeting in February (the "First
General Meeting"), at which Saba's Requisitioned Resolutions were defeated by
shareholders and, following constructive discussions with Saba, the second
requisition notice was withdrawn.
The Board had already undertaken to commence a comprehensive Strategic Review
designed to identify a way forward to enhance value for and in the best
interests of all shareholders. This was expedited following the First General
Meeting and, at the end of May, the Board proposed to offer shareholders a
free choice between remaining invested in the Company with value enhancing
initiatives, and/or exiting for cash through a Tender Offer.
The Tender Offer was approved by shareholders at the General Meeting of the
Company held on 25 June 2025 (the "Second General Meeting") and closed on 30
June 2025. A total of 29,334,059 shares, representing 45.72% of the shares in
issue (excluding shares held in treasury) were validly tendered. Saba
undertook to tender all of the shares it owned, which, at the time, was
equivalent to 29.07% of the Company's issued share capital (excluding shares
held in treasury).
Going forward, the Company and shareholders will benefit from the following
value-enhancing initiatives put in place by the Board:
● a reduction of investment management fee, backdated with effect from 1
May 2025 to a flat 1 per cent. per annum of the NAV of the Company (a 20 basis
point reduction on the previous highest tier of fee);
● the adoption of an enhanced annual dividend of circa 8 per cent. of
NAV via a quarterly dividend policy of 2 per cent. of the preceding
quarter-end NAV per share using capital reserves as necessary and without any
alteration to the current investment strategy; and
● in order to provide shareholders who remain invested in the Company
after the Tender Offer with a period of stability, a postponement of the next
continuation vote until the AGM to be held in 2028 and biennial continuation
votes thereafter, in accordance with good governance standards and as approved
by shareholders at the Second General Meeting.
In addition, to further provide stability, the Board obtained agreement that
the Investment Manager would not serve notice on the Investment Management
Agreement other than for cause and entered into a Standstill Agreement with
Saba until the conclusion of the 2028 AGM, committing that Saba will not
requisition a general meeting or seek to remove the directors.
I invite you to refer to the circulars published by the Company on both 28 May
and 7 January 2025 which can be found on the Company's website and provide far
greater detail than I am able to within these few pages.
Performance, discount and gearing
During the year to 30 June 2025, the Company's net asset value ("NAV") total
return per share returned 4.6%, outperforming the total return of (4.5)% of
its performance comparator, the MSCI World Metals and Mining Index (sterling
adjusted), to which 72.2% of the Company's portfolio (as at 30 June 2025) can
be attributed. The Company similarly outperformed the total return of (7.7)%
of the MSCI World Energy Index (sterling adjusted), however, the Company's
portfolio has a smaller relative exposure (13.5% as at 30 June 2025) to this
performance comparator.
As I highlighted in the Half Year Report, although the Company's short-term
returns have the potential to be volatile, as explained by the Investment
Manager, over the longer term, the Company's NAV per share total return has
been an impressive 155.8% for the five years to 30 June 2025, compared with
total returns of 62.5% for the MSCI World Metals and Mining Index (sterling
adjusted) and 128.6% for the MSCI World Energy Index (sterling adjusted).
The Company's share price total return over the year was 9.3%, while the share
price increased from 189 pence on 1 July 2024 to 199.5 pence as at 30 June
2025. As at 30 June 2025 the discount to NAV was 6.1%. Over the year the
discount averaged 8%, compared with 15% over the course of the previous
financial year.
During the year, the Company bought back a total of 2,002,114 shares into
treasury at a cost of £3.6 million and at an average discount of 11.2%. The
resulting NAV accretion was 0.4%. The Company's discount narrowed since the
Company started buying back shares in April 2024, but also as Saba reported
increases in its shareholding in the Company towards the end of the 2024
calendar year. The Company has not repurchased any of its own shares, other
than under the Tender Offer, since 31 October 2024. As at 30 June 2025, the
Company had 64,157,838 shares in issue (excluding 2,730,671 shares held in
treasury).
The Company's £25 million credit facility with Scotiabank expired after a
one-year term on 13 September 2024 and, following the Board's review of
alternative credit facility providers, the Company entered into a two-year
agreement with BNP Paribas for the provision of a £25 million secured
revolving credit facility. On 11 September 2025, the Board met to consider the
reduction of the Company's loan facility and determined to voluntarily
decrease the facility limit from £25 million to £15 million to reflect the
reduced size of the Company, following the Tender Offer. Further detail can be
found within Note 12 to the Financial Statements.
Continued market volatility and several months of uncertainty for the Company
as a result of the Strategic Review led the Investment Manager to reduce
gearing over the year from 10.1% at the start of the year to 4.8% as at the
year end. As at 30 June 2025, £9 million had been drawn down from this
facility (30 June 2024: £17 million). As at the date of this report, £11.5
million has been drawn down.
Dividends and income
As I wrote following the six month reporting period to 31 December 2024, the
Income Statement on page 66 of the Annual Report and Note 2 to the Financial
Statements reports an overall reduction in income from investments during the
year. This continues to be due to a conscious repositioning of the portfolio
by the Investment Manager in leading a total return investment strategy, in
anticipation of continued market turbulence. As shown by the 'by commodity'
illustration on page 18 of the Annual Report, the Company's exposure to
high-yielding shipping stocks was reduced by 16% between 30 June 2024 and 30
June 2025 and exposure to precious metals, which are typically lower yielding,
was increased by 55% in the same period. Whilst having a positive effect on
capital returns during the period, this inevitably created the reduction in
income.
Your Company has paid four interim dividends totalling 8.03 pence per share in
respect of the year. This compares with 6.60 pence per share paid in respect
of the year ended 30 June 2024. Please see the following 'Post reporting
period update' section for further detail in respect of changes to the
Company's dividend policy.
Post reporting period update
A dividend of 4.25 pence per share was declared on 15 July and paid on 1
September to shareholders on the register on 1 August. Whilst this was the
fourth interim dividend in respect of the year ended 30 June 2025, it was the
first declared following the adoption of the enhanced dividend strategy
announced as part of the value-enhancing initiatives put in place by the Board
during the year and based on 2 per cent of the preceding quarter-end NAV per
share. We know that many of the Company's shareholders already reinvest their
dividends, however, we remind shareholders who hold their shares on retail
investment platforms that many platforms offer customers the ability to
automatically reinvest dividends.
Following the year end, your Company has experienced further share price
growth of 33.3% with the share price reaching 266 pence at the time of writing
(market close on 24 October). This has primarily been driven by strong
performance in precious metals sector and the catch up of precious metals
miners, and the Company's large weighting to the sector.
On 29 September, the Company's share price had consistently traded at a
premium to its NAV and the Board took the decision to sell shares out of
treasury. Since then, a total of 265,000 shares have been sold from treasury
at an average price of 314.75 pence per share and at a premium of at least
2.0% to NAV.
The Board is conscious that, having issued shares at a premium to net asset
value, the Company's shares should not trade at too wide of a discount to
their NAV. 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.
As announced by the Company separately, on 1 October Cavendish purchased, as
principal, 29,334,059 shares validly tendered under the Tender Offer at the
Tender Price of 208.33 pence per share. Cavendish then sold these shares back
to the Company and 8,800,000 of the shares tendered were retained to be held
in treasury and the remainder cancelled. As at 24 October, the latest
practicable date prior to the publication of this Report, the Company's issued
share capital (excluding shares held in treasury) comprised 46,354,450 shares,
with 11,265,671 held in treasury and able to be re-issued.
Board of Directors
In August 2024, we were pleased to welcome Louise Hall and Seema Paterson to
the Board ahead of the retirement of two long-standing and dedicated
non-executive directors, Alun Evans and Helen Green, at the 2024 AGM. These
changes resulted in my succession to the role of Chairman of the Board and
Seema's succession to the role of Chair of the Audit Committee.
Shareholders may note that both Carole Cable and I have recently entered our
ninth year of tenure having been non-executive directors of your Company since
October 2017. Carole and I will both seek re-appointment by shareholders at
the AGM in December, however, it is the current intention that Carole will
retire at the conclusion of the AGM to be held in 2026, in-line with best
practice corporate governance. Carole's contribution to the Board throughout
her tenure has been admirable, but especially so during the course of this
year in using the depth of her expertise to guide the Board and the Company's
advisers to ensure the best possible communication and engagement with
shareholders in difficult circumstances.
Following in-depth consideration of succession planning by the Nomination
Committee, it is currently the intention that I shall continue to serve as
Chairman until the conclusion of the AGM to be held in 2027, following which I
shall retire. The Nomination Committee assessed the impact of the simultaneous
retirement of both Carole and me following respective nine year tenures and
concluded that this staggered retirement would be in the interests of orderly
succession and facilitate continuity and stability of the Board. The
Nomination Committee do 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. Further, given the events over the second half of
the financial year, it is highly appropriate to have stability and continuity
within your Board to deliver on the Company's strategy. Despite this
anticipated delay to my expected retirement, succession planning efforts will
continue to be a priority for the Nomination Committee, capably led by Paul
Cahill.
The Board is proposing to increase the maximum aggregate amount potentially
payable to Directors by way of fees for their services as Directors under
Article 80 from £200,000 to £250,000 in any financial year. This proposed
limit increase is not due to any unusual rise in Directors' fees, which are
expected to be approximately £182,000 in the current financial year
(excluding any expenses to be claimed), but to provide flexibility in the
timing of future board recruitment and in order to ensure that the levels of
remuneration continue to be sufficient to attract and retain directors of the
Company.
Annual General Meeting ("AGM")
The business of the AGM is summarised in the Directors' Report on pages 43 and
44 of the Annual Report and the Notice of Meeting beginning on page 91 of the
Annual Report. The AGM will be held at One Fleet Street Place, London, EC4M
7RA at 12 noon on Tuesday, 9 December 2025.
As mentioned earlier, the Board will not propose an annual continuation vote
at this year's AGM. While the continuation vote at each AGM was not enshrined
in the Company's articles, it had been a firm commitment from the Board since
2003, and an ordinary resolution to effect the change of policy for future
continuation votes was approved by shareholders at the General Meeting held on
25 June. The Board believes that a biennial continuation vote following the
AGM to be held in 2028 strikes a better balance between the ability of
shareholders to discontinue the Company, which the Board considers an
important feature, and the longer investment cycle over which performance and
prospects should be judged given the cyclicality of the underlying investments
in the natural resources sector.
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.
The Board encourages all shareholders to exercise their right to vote at the
AGM and, where possible, to do so in respect of the meeting 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.
Outlook
As our portfolio managers highlight in their review, the environment in which
the Company invests remains subject to ongoing global macroeconomic
uncertainty. However, the portfolio managers continue to keep investment
allocation keenly under review and we share their optimism for future
opportunities.
Amid persistent global economic uncertainty and rising government debt, the
Company maintains a high allocation to undervalued precious metals equities,
which continue to offer attractive fundamentals, despite recent volatility.
Through active fund management, the team has taken profits in outperforming
names and rotated into laggards to manage risk and capture value. Looking
ahead, concerns over currency debasement and long-term demand for real assets
- driven by themes such as energy security, decarbonisation, and AI
infrastructure - are expected to support broader investor interest in
commodities.
I must also inform shareholders that Ian "Franco" Francis will step away from
his role as co-portfolio manager of the Company with effect from 28 October.
My Board colleagues and I would like to thank Franco for his greatly valued
expertise and contribution to the Company's performance over many years. We
have full confidence in the ability of Robert Crayfourd and Keith Watson to
manage the Company's investments and deliver out-performance against
comparator indicies. Further detail can be found within the Investment
Manager's Review.
I would like to extend our sincere thanks to shareholders for their continuing
support of the Board, the Company and its Investment Manager during what has
been an unusual and challenging year, and we look forward to seeing you at the
forthcoming AGM.
Christopher Casey
Chairman
27 October 2025
Capitalised terms not otherwise defined in this Report have the meaning given
to them in the circulars published by the Company on 7 January and 28 May
2025.
Investment Manager's Review
"The Company's large weighting to gold continues to drive performance"
Performance
The net asset value in total return terms was a positive 4.6% for the
financial year to 30 June 2025, one that proved particularly turbulent.
Encouragingly, this return has also been achieved against a headwind of
sterling strength, with the pound having risen nearly 9% against the US
dollar. This full year gain compares with sterling adjusted returns of (4.5)%
and (7.7)% for the MSCI World Metals and Mining and MSCI World Energy indices,
respectively.
Outperformance has primarily been led by the Company's large precious metals
weighting (47% as at the year end), whilst a bounce back in uranium miners as
we approached the Company's year end, after a bout of weakness, has also
helped the Company's performance. In comparison, industrial base metals and
iron ore have been weak, as have oil prices. These commodities have continued
to struggle as a result of a still relatively muted demand growth outlook and
in the case of energy, a shift in OPEC+ strategy targeting market share.
After the encouraging performance over the year, we believe the portfolio's
fundamental positioning can sustain further momentum. Indeed, at the time of
writing, since the financial year end, the Company has achieved 49.2% NAV
total return while sterling adjusted returns for the MSCI World Metals and
Mining and MSCI World Energy indices stand at 31.5% and 6.2% respectively.
While precious metals made the most significant contribution to the Company's
returns, the performance of individual precious metal stocks has been somewhat
disjointed, and as a result, provided attractive investment opportunities. Of
note, having reduced holdings in gold producer, Emerald Resources, in 2024
after significant growth in performance, the Company rebuilt its position in
the period under review following a substantial derating and this proved to be
the right decision. The position in gold producer, Ora Banda, whose share
price had outperformed the precious metal sector into calendar Q4 2024 was
reduced ahead of some slower-than-expected progress in its underground
development. Similarly, the position in producer, Greatland Gold, was pared
back as has the holding in explorer, Collective Mining. Proceeds from such
sales were reinvested, with positions taken in developer, Polymetals, which
will produce significant quantities of silver from its mine restart, and
explorers, Goliath Minerals and Southern Cross Gold, which both appear to be
well positioned to delineate large-scale, high grade gold resources in Canda
and Australia respectively.
One of the more significant detractors to the Company's returns was its
exposure to lithium, principally via the holding in Sigma Lithium. While
significantly reducing the allocation to this sector some time ago, a residual
position was retained given Sigma's growth potential and industry leading
economics. A sharp fall in lithium prices and equity derating across the
sector has acted as a drag to the Company's performance. A supply correction
appears to be underway and, to this end, some modest increase in the Sigma
position took place early in the financial year although we have yet to see
improvement in the underlying lithium price or indeed the share price.
Elsewhere, the Company has also topped up its position in Tamboran Resources,
which has more recently consolidated its land position in the highly
prospective Beetaloo gas field in Australia, which has the potential to exceed
the Marcelus in its scale at more advantageous prices. Though some patience
will be required, with its pre-eminent strategic position in this region the
stock has the potential to grow into an E&P major, representing an
extremely attractive risk/reward investment.
Portfolio Allocation
The portfolio positioning has remained much the same over our fiscal year.
With currency devaluation increasingly coming under scrutiny, reflecting
strained government borrowing requirements from a position of already extended
indebtedness, and a backdrop of muted underlying economic growth, the
Company's portfolio remains weighted towards precious metals. President
Trump's "Big Beautiful Bill" ("BBB") is only the latest example of government
spending which has focused attention on the value of currencies.
Unfortunately, many other economies are in a similar boat. The "weaponisation"
of the US dollar has been another significant contributor to its recent
softness. These factors continue to underpin central banks' continued buying.
In such an environment, and with equity valuations remaining near historic
lows, precious metals remains the highest sector exposure for the Company.
This is highlighted in the chart on page 12 of the Annual Report.
Exposure Trend
Adjusting for the acceleration of trade in an effort to beat incoming tariffs,
underlying aggregate growth remains muted. In China, stimulus measures are
being targeted selectively at consumers and productivity improvements rather
than the struggling commodity-consuming property sector, which remains in the
doldrums. Though the longer-term prospects for metals such as copper is
positive, the near-term outlook warrants some caution, particularly given
significant pre-emptive inventory building.
Furthermore, though the aggressive tariffs proposed by President Trump earlier
in the calendar year were briefly watered down, they have since been reapplied
and the underlying economic impact has yet to be felt. This uncertainty will
continue to apply pressure on inflation, aggregate demand and industrial
growth, which remain largely muted, with pockets of considerable weakness in
regions such as Europe.
In light of factors such as pre-tariff stockpiling, which we expect to dampen
demand in the near-term, together with the less attractive valuation of
industrial metal miners, the Company's exposure to industrial metal producers
remains relatively low.
Macro Position
President Trump's "liberation day" on 2 April, in which he stated the US would
look to apply tariffs to the majority of its global trading partners, upended
global markets, with the scale of threatened tariffs a shock when compared
with market expectations. Global markets responded poorly, bottoming out on 8
April, before rebounding strongly. Behind this recovery, market perceptions
adjusted to anticipate a dial-back in the overly aggressive tariff rates
whilst significant front-loading of imports also played a role in disguising
the impact of tariffs on the real economy.
Ultimately, these tariffs are a consumer tax that will be passed directly
through to the US consumer and show via reduced consumption or inflation or a
mix of the two. Perhaps more telling is the fact that despite the recovery in
broader US equity markets, such as the S&P which has since reached new
highs, in many non-US dollar currencies, US investments remain lower than at
the start of the calendar year, testament to the impact of recent US dollar
weakness. This may have repercussions with respect to previous momentum driven
investment styles with the more recent focus on the currencies' worth
potentially seeing more meaningful allocation into the commodity asset class
more broadly and particularly into gold.
On the back of this uncertainty, precious metals have been the standout
performer over the most recent six-month period, with gold and silver up 26%
and 25%, respectively, benefiting the Company's large exposure to this equity
sector.
Elsewhere, crude markets have been softer over the period, with benchmark
prices falling 8%. The combination of weak global demand growth and OPEC
shifting back to a market share over price protection strategy weighed on the
oil price. The Company has a much reduced energy weighting, with the energy
exposure more weighted to gas, limiting any impact from the oil move to
performance.
US debt sustainability remains a keen focus behind the Company's portfolio
allocation, though, as ever, the timing of any potential shift to this remains
uncertain. While a rate reduction cycle appears likely, as the delayed impact
of tariffs weighs, the pace of reduction is hindered by stubbornly high
inflation. With President Trump's policies deterring foreign buyers of US
assets combining with a demographic risk from an approaching peak in US
boomers' savings, the pool of buyers for Treasuries creates a difficult
backdrop for authorities to continue running a $2-3trn/yr deficit.
With this backdrop, we still believe gold remains one of, if not the most
attractive asset classes. While understood by Central Banks who have been the
primary drivers of demand and prices that have repeatedly made new highs over
the last 12 months, financial market investors have largely been on the
sidelines, adding only 7 million oz since February. While central banks are
likely to remain solid buyers of gold, uncertainty around government debt
sustainability may drive more financial market demand over the coming
quarters.
Our other investment themes remain similarly intact from last year. Notably,
AI and the huge spend by the world's largest tech companies continues to
support investment in clean energy including nuclear power. While subsidies
are increasingly under threat for intermittent renewable energy, primarily
wind and solar, there has been a huge drive to roll out nuclear power, where
the key positive remains its ability to generate carbon free base load
generating ability. Recent power purchase agreements by large tech companies,
bear testament to the resurgence in demand for fuel, which remains in deficit.
Though uranium prices retreated from 2024 highs of over $100/lb, the outlook
continues to improve with nations globally setting targets to triple
generating capacity by 2050. China continues to roll out new reactors at a
rate of c.10 a year in an effort to raise the sector's share of generating
capacity from on 5% currently (versus 20% in established markets such as the
US and Europe).
Meanwhile, following the burst of buying activity around 18 months ago,
utilities have been dormant and with inventories now approaching critically
low levels, there is an increasing risk that they will once again enter the
market, which may sustain the performance of related equities which have
latterly contributed to performance. Gas will also remain an important factor
in the growth of tech-led energy demand and this, along with shipping, remains
the most important exposure in the fossil sector allocation for the Company.
The Company has also begun to selectively add back lithium investments
following the sharp correction in commodity prices and equity valuations.
Investment Management Team
Manulife | CQS Investment Management have been the Company's Investment
Manager since 2007. Ian "Franco" Francis, the chief investment officer for the
four investment companies managed by Manulife | CQS, has been a part of the
investment management team since 2007 and has been responsible for the fixed
interest, convertible and preferred stock investments in the portfolio.
The Company is now following a total return strategy with an increased
dividend, which is being funded, in part, from capital growth and, as a
result, the proportion of non-equity investments has reduced and is currently
only 2.3% of the portfolio. Manulife | CQS have therefore agreed with the
Board of Directors that Franco will step down from the Company's investment
management team from 28 October to concentrate on his other fixed interest
portfolio management clients. Robert Crayfourd and Keith Watson will continue
as joint portfolio managers with day-to-day responsibility for managing the
Company's portfolio.
Outlook
At time of writing, aggregate global economic growth remains elusive while
underlying activity is potentially flattered by inventory building, a
pre-emptive effort to smooth out the effects of US trade policies. With little
to suggest an end is in sight for fractious international trade, which is
acting as a considerable drag to economies, the sustainability of growing
government indebtedness has moved rapidly into focus. In such an environment a
high weighting to precious metals equities continues to appear appropriate,
particularly as they have yet to fully appreciate the move up in underlying
metal prices and they remain near historically low valuations. In this
context, despite their recent strong performance, precious metal equities
remain the largest sector allocation in the Company's portfolio. This remains
the case despite significant recent sector volatility. To mitigate against the
effect on performance from such volatility, the Company, during the latest run
in prices, exited some positions such as Wheaton Precious Metals and also
rotated from outperforming stocks, such as Equinox and Ora Banda, into
laggards. Importantly, despite the recent volatility, there is little to
suggest any fundamental change to the reasons for increasing investor
allocations towards under-owned gold and the prospect of sector inflows,
particularly via equities which remain attractively valued.
Outside of this safe-haven asset class, thematics behind the global nuclear
renaissance remain supportive for continued investment which is reflected by
holdings in Tier One developers such as NexGen.
Elsewhere, while distortions from stockpiling may still be propping up
industrial commodity prices, related premium equity valuations are not
sufficiently attractive to warrant more meaningful asset reallocation in the
near-term. As a result, it appears prudent to wait for better opportunities to
rebalance towards these sectors. This is the case for base metals such as
copper, where the modest portfolio exposure is primarily directed at
early-stage development assets that have the potential to deliver metal in the
future.
The same is also true of traditional energy markets. Typically, a lead
indicator on broader economic growth and at the forefront of the current
geopolitics, crude oil markets are still absorbing a reversal in OPEC+
strategy towards volume over value, while China's strategic stockpiling is
acting to support prices. Natural gas markets are also dealing with more
recent expansion in production and export capacity from North America and
production increases in the Middle East. On the related energy equities side,
this situation has yet to be fully discounted. Natural gas (and nuclear as
mentioned above) remains a favoured sector as a cleaner stopgap method of
delivering power over the medium-term and longer term respectively, to replace
coal fired power.
Looking ahead, we believe the fear of currency debasement, due to over
indebted governments forced to allow inflation to run higher than they would
otherwise tolerate via currency devaluation, will be a defining factor of the
next decade. This is supportive for all real assets and a key driver of the
recent strength in gold. Although current sentiment for the resources sector
as a whole remains muted, growing demand for key commodities leveraged to
economic growth, energy security, decarbonisation and the growth in AI data
centres, will underpin the sector given expected future supply deficits. We
believe this should support a broader reallocation of assets within generalist
investor portfolios as they take advantage of these mega trends and will
provide a tailwind to valuations beyond current attractive fundamentals. We
will continue to identify smaller and emerging commodity specific cycles
within this longer term thematic, with our key focus on creating value. The
active allocation within the portfolio provides the flexibility to act on
opportunities and we are watching carefully for the right time to shift the
current high precious metal weighting into the likes of oil and copper when
valuations are sufficiently depressed.
Ian (Franco) Francis, Keith Watson and Robert Crayfourd
Manulife | CQS Investment Management
27 October 2025
Top ten largest holdings
as at 30 June 2025
NexGen Energy
(8.2% of investments)
A tier 1 uranium development asset in the established Athabasca Basin uranium
mining district in Saskatchewan, Canada, has the potential to be the lowest
cost uranium mine globally. As a zero-carbon source of energy, civil nuclear
power generation and hence uranium, may gain further traction in global energy
mix.
£'000
▼
(530)
Fair value losses
Sales
-
Purchases
1,384
2024 10,874
2025 11,728
Emerald Resources
(5.7% of investments)
An Australian listed gold producer, with a producing mine in Cambodia and
development asset in Australia. The company has successfully commissioned its
low cost Okvau gold mine in Cambodia on time and budget. This strong
management team has a long history of delivering mines on time and budget and
are self-funded for the future growth profile.
£'000
▲
59
Fair value gains
Sales
(372)
Purchases
716
2024 7,750
2025 8,153
Greatland Gold
(4.9% of investments) (new investment in 2025)
The Company operates the Telfer gold mine, one of Australia's largest
gold-copper mining complexes and is concurrently developing the nearby
world-class Havieron gold-copper project and exploring across a significant
regional portfolio.
£'000
▲
4,867
Fair value gains
Sales
(500)
Purchases
2,704
2024 -
2025 7,071
West African Resources
(4.5% of investments)
An Australian listed emerging mid-tier gold producer based in the West African
region. The company acquires, explores and develops resource projects, and
serves customers in West Africa and Australia.
£'000
▲
1,713
Fair value gains
Sales
(1,509)
Purchases
341
2024 5,941
2025 6,486
Frontline
(3.8% of investments)
A leading listed seaborne transporter of crude oil and refined products. The
company owns and operates one of the largest and most modern fleets in the
industry, consisting of VLCCs, Suezmax tankers and LR2 / Aframax tankers. Due
to Frontline's brand, financial flexibility and significant scale, it holds a
unique position among its peers.
£'000
▼
(2,101)
Fair value losses
Sales
(2,538)
Purchases
4,138
2024 5,902
2025 5,401
REA Holdings
(3.5% of investments)
A leading contributor to responsible palm oil production globally. REA has a
commitment to produce sustainably and has also received Roundtable on
Sustainable Palm Oil certification. Following substantial cost cutting
measures the group is well placed to benefit from the recent recovery in the
crude palm oil price.
£'000
▲
546
Fair value gains
Sales
(145)
Purchases
-
2024 4,681
2025 5,082
Ora Banda Mining
(3.5% of investments)
An Australian gold exploration and development company, with 100% ownership of
the Davyhurst Gold Project in the highly productive eastern goldfields region
of Western Australia.
£'000
▲
4,778
Fair value gains
Sales
(3,780)
Purchases
-
2024 3,948
2025 4,946
Southern Cross Gold
(3.4% of investments) (new investment in 2025)
An Australian gold exploration company with projects including Sunday Creek,
Redcastle and MT ISA. The Company owns 100% of Sunday Creek epizonal-style
gold project in Australia which is considered to be the best new high grade
and large exploration discoveries to come out of Australia in recent times.
The Company is also engaged exploring in antimony in the Victorian Goldfields.
£'000
▲
3,705
Fair value gains
Sales
-
Purchases
1,102
2024 -
2025 4,807
BW LPG
(3.3% of investments)
The world's largest independent LPG shipper, predominantly sending propane
from the US and Middle East to Asia. Propane is a by-product of shale
production, so benefits from increased activity in the US. Napha switching at
refiners and displacing wood for propane as fuel in the likes of India are
major drivers of demand growth. The company has a strong capital returns
policy, primarily through dividends.
£'000
▼
(2,659)
Fair value losses
Sales
(930)
Purchases
1,402
2024 6,876
2025 4,689
Tamboran Resources
(3.2% of investments)
A US listed natural gas exploration and production company, which specialises
in the transition to cleaner energy and supports the energy transition by
developing commercial production of natural gas and net zero equity scope 1
and 2 emissions. Tamboran Resources conducts its business in Australia.
£'000
▼
(542)
Fair value losses
Sales
(66)
Purchases
-
2024 5,171
2025 4,563
To see a full breakdown of our investments as at 30 June 2025 see Investment
Portfolio
Portfolio at a glance
By commodity
2025 % of total investments 2024 % of total investments
Precious Metals 44.8% 32.2%
Uranium 14.8% 10.3%
Oil & Gas 13.5% 24.3%
Shipping 7.3% 9.1%
Base Metals* 6.1% 5.3%
Copper 4.4% 3.9%
Fixed Interest Securities 3.9% 3.2%
Rare Earth 2.2% 1.5%
Lithium 1.8% 5.4%
Coal 1.0% 4.0%
Royalty 0.4% 0.5%
Diversified Minerals - 0.3%
Palm Oil - 0.1%
* Comprises polymetallic investee companies.
By location of listing
2025 % of total investments 2024 % of total investments
Canada 35.3% 34.7%
Australia 28.2% 21.3%
US 17.2% 22.3%
UK 12.3% 10.8%
Europe 5.7% 7.6%
Unquoted 1.3% 3.4%
Investment Portfolio
as at 30 June 2025
Company Sector Valuation % of total
£'000 investments
NexGen Energy Uranium 11,728 8.2
Emerald Resources Precious Metals 8,153 5.7
Greatland Gold Precious Metals 7,071 4.9
West African Resources Precious Metals 6,486 4.5
Frontline Shipping 5,401 3.8
REA Holdings(1) Fixed interests 5,082 3.5
Ora Banda Mining Precious Metals 4,946 3.5
Southern Cross Gold Precious Metals 4,807 3.4
BW LPG Shipping 4,689 3.3
Tamboran Resources Oil & Gas 4,563 3.2
Top ten investments 62,926 44.1
Equinox Precious Metals 4,354 3.0
Ur-Energy Uranium 4,075 2.8
Wheaton Precious Metals Precious Metals 3,276 2.3
Transocean Oil & Gas 3,191 2.2
Robex Resources Precious Metals 3,102 2.2
Lynas Corporation Rare Earth 3,090 2.2
Polymetals Resources Precious Metals 2,750 1.8
Westgold Resources Precious Metals 2,574 1.7
Peyto Exploration & Development Oil & Gas 2,493 1.7
Diamondback Energy Oil & Gas 2,475 1.7
Top twenty investments 94,306 65.7
G Mining Precious Metals 2,398 1.7
Solaris Resources Copper 2,264 1.6
Collective Mining Base Metals 2,185 1.5
Talon Metals Base Metals 2,112 1.5
Vermilion Energy Oil & Gas 1,804 1.3
ISOEnergy Uranium 1,802 1.3
Denison Mines Uranium 1,751 1.2
TDG Gold Precious Metals 1,682 1.2
Americas Gold and Silver Precious Metals 1,664 1.2
Afentra Oil & Gas 1,607 1.1
Top thirty investments 113,575 79.3
Metals X Base Metals 1,592 1.1
Paladin Energy Uranium 1,458 1.0
MAG Silver Precious Metals 1,422 1.0
Thungela Resources Coal 1,403 1.0
EOG Resources Oil & Gas 1,396 1.0
Foran Mining Base Metals 1,272 0.9
WESDOME Gold Mines Precious Metals 1,223 0.9
Solgold Copper 1,094 0.8
Cerrado Gold Base Metals 1,076 0.8
Sigma Lithium Resources Lithium 1,043 0.7
Top forty investments 126,554 88.5
Integra Resources Precious Metals 957 0.7
Leo Lithium Lithium 932 0.7
True North Copper Copper 893 0.6
Newcore Gold Precious Metals 892 0.6
Eldorado Gold Precious Metals 884 0.6
Osisko Development Precious Metals 849 0.6
Vizsla Silver Precious Metals 683 0.5
New World Resources Copper 680 0.5
Ero Copper Copper 667 0.5
Greenheart Gold Precious Metals 624 0.4
Top fifty investments 134,615 94.2
Spartan Delta Oil & Gas 606 0.4
Central Asia Metals Copper 603 0.4
Golden Horse Minerals Precious Metals 561 0.4
CVW Cleantech Royalty 548 0.3
Patriot Battery Metals Lithium 518 0.3
Platinum Group Metals Precious Metals 481 0.3
Shelf Drilling Oil & Gas 443 0.3
Euronav Fixed interests 436 0.3
Firefinch Precious Metals 431 0.3
Ithaca Energy Oil & Gas 394 0.3
Top sixty investments 139,636 97.5
2020 Bulkers Shipping 392 0.3
Mawson Finland Precious Metals 386 0.3
Rupert Resources Precious Metals 384 0.3
NorAm Drilling Oil & Gas 356 0.2
Cosa Resources Uranium 330 0.2
Castile Resources Base Metals 316 0.2
C3 Metals Precious Metals 313 0.2
Tharisa Precious Metals 270 0.2
Silver Mountain Resources Precious Metals 231 0.2
Odyssey Gold Precious Metals 163 0.1
Top seventy investments 142,777 99.7
Other investments 489 0.3
Total 143,266 100.0
(1) Includes REA Holdings 9% preference shares valued at £4,581,000
(2024: £4,063,000) and REA Finance 8.75% 31/08/2025 valued at £502,000
(2024: £460,000).
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 can be
controlled to the extent possible. The Board is responsible for managing risks
faced by the Company and, through delegation to the Audit Committee, has
established a detailed framework to manage 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 Company resulting in loss of shareholder interest. Board and Committees
→ Inappropriate investment strategy, including country and sector allocation, • The Board has appointed Manulife | CQS as Investment Manager as they
stock selection and the use of gearing, could lead to poor returns for have long and deep natural resources knowledge, networks and experience. The
shareholders. portfolio managers understand the global trends of energy transition, digital
and economic growth and energy security. The Board receives and reviews the
Investment objectives are not met, Company does not perform well against explanation of significant asset selection decisions and the rationale for the
peers/benchmark, internal targets are not met. composition of the investment portfolio provided by Manulife | CQS at
quarterly Board meetings and interim dividend review meetings.
Loss of shareholder interest could result in widening of discount and
diminished ability to issue new shares and grow the Company. • The Company spreads investment risk over a portfolio of global
resource quoted equities and fixed-interest securities and the Board regularly
Liquidity of the Company's shares in the market would be reduced. monitors the spread of investments to ensure that it is adequate to minimise
the risk associated with specific countries or sectors.
• The Management Engagement Committee reviews Manulife | CQS's
appointment and performance annually.
Key Service Providers
• Manulife | CQS 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.
• Manulife | CQS produces monthly factsheets, which include an
investment commentary.
• Reports and updates on the Company's investment portfolio, including
currency exposures, and recent transaction, latest income and expense
forecasts are prepared by Manulife | CQS 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.
Market, Sector and Geopolitical Risk By the nature of its investing activities, the Company's portfolio is exposed Board and Committees
to fluctuations in market prices (both individual security prices and foreign
↑ exchange) and also risks associated with the specific sectors in which its • The closed-end structure of the Company is an essential part of the
portfolio companies operate, such as inflation, interest rates, commodity and Board's management of this risk, ensuring that parts of the portfolio do not
energy prices. 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
Geopolitical developments and regional conflicts could affect the environment reviewed monthly by the Board.
in which the Company operates, resulting in volatilities in prices, foreign
exchange rates and interest rates, which can negatively impact the value of • The Board reviews the Company's performance against comparator
the Company's investments and/or demand for its shares. indices on an ongoing basis and receives a formal report from Manulife | CQS
at quarterly meetings.
• The Board has a regular dialogue with Manulife | CQS to assess the
Excess exposure to any stocks or sectors, geographies or currencies could impact of geopolitical events and to evaluate both the risks and opportunities
reduce diversification and lead to unacceptable volatility of returns. 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 Manulife | CQS's investment process
and decisions and Manulife | CQS 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 Manulife | CQS and Frostrow for the
Board's review regularly and at each quarterly meeting.
Widening discount to NAV Demand for shares in the Company declines due to failure to promote the Board and Committees
Company, meet investors' objectives, poor investment performance, and/or poor
↓ communication with shareholders (including information published on the • During the year the Company offered shareholders a free choice
Company's website), resulting in falling share price and widening of discount, between remaining invested in the Company with value enhancing initiatives,
threat from arbitrageurs and/or reputational damage. and/or exiting for cash through the Tender Offer.
This risk is heightened by persistent wide discounts to NAV per share in the • The enhancement of dividends to circa 8% p.a. aims to reach an even
investment trust sector. wider potential investor base by making the Company's shares more attractive.
• The Board monitors the share price, and any signs of demand
reduction are discussed, and actions are taken, including buying back the
Company's shares.
• Periodically the Board holds a strategy meeting to review the
investment objectives and strategy, and action identified to support demand
for the shares.
• The Board has appointed an investment research firm to provide
independent research for retail shareholders to support demand.
• The Board receives regular feedback on key service providers'
interactions with investors. Shareholder registers and key shareholder
activities are provided to and reviewed by the Board at quarterly meetings
with negative trends identified. The Company has entered into a Standstill
Agreement with Saba until the conclusion of the 2028 AGM.
• The Company offers shareholders a continuation vote every two years
(the next vote being postponed to the AGM in 2028. Please refer to the
Chairman's Statement for further details.
Key Service Providers
• Manulife | CQS regularly meets with investors to discuss their
objectives to make sure the Company's objectives remain appropriate and some
of those meetings are attended by the Chair of the Board.
• A range of marketing activities is carried out by Manulife | CQS,
Cavendish Capital Markets, Frostrow's Investor Relations Team and Tavistock
Communications to promote demand for the shares.
• Manulife | CQS produces a monthly factsheet which is published on
the Company's website and the regulatory news service and is circulated to key
investors by Manulife | CQS's marketing department.
• The Company's website is maintained by the and regularly updated by
Manulife | CQS and reviewed by the Board.
Key Person Risk Performance of the Company may be negatively affected by a change or loss of Board and Committees
key personnel in the investment management team.
↑
• The Management Engagement Committee reviews Manulife | CQS's
appointment and performance annually.
The risk of manager loss is material given the specialist nature of the • The Board receives regular updates on developments and succession
Company. planning, where appropriate, and any key personnel changes at the Investment
Manager.
• The Company's agreement with Manulife | CQS contains a six-month
Loss of key personnel could result in poor performance, lower investor demand notice period, which helps minimise any potential disruptions from changes in
and/ or a widening of any share price discount to NAV which could limit the key personnel.
strategic options of the Board.
• Board members spend time with the management team outside of
meetings to build a rapport and understand any issues they may have.
Key Service Providers
• There are currently three portfolio managers who are responsible for
day-to-day portfolio management which reduces the risk of any one fund
manager's departure.
• An Investment Committee at Manulife | CQS oversees key stock
selection and could support the Company in the event of a period of change.
• Manulife is a large asset management firm with a wide network across
geographies and sectors including resources and commodities. They can pull on
internal resources in the short term should the need arise.
Non-Compliance with Laws and Regulations The Company is subject to laws and regulations, including the UK AIFMD, the Board and Committees
Companies Act 2006, the FCA Listing Rules, the Bribery Act 2010, the Criminal
↓ Finances Act 2017, GDPR, relevant accounting standards and tax regulations, • The Board rigorously reviews internal controls and compliance
Market Abuse Regulations, the AIC Corporate Governance Code 2024 ("AIC Code") reports, and key policies put in place by the Company's key service providers
or other applicable regulations. as part of the annual service provider review.
A breach of legal and/or regulatory rules could lead to a suspension of the • The Board has established procedure for Directors share dealings,
Company's stock exchange listing or financial penalties. and PDMR and PCA lists are maintained by the Frostrow and reviewed at Board
meetings.
This could ultimately result in the Company winding up and/or damage to its
reputation. • Annual results are reviewed and approved by the Board prior to
external release to shareholders.
Provision 34 of the AIC Code for accounting periods beginning on or after 1
January 2026 will introduce the requirement for company boards to disclose how
internal controls are monitored and make declarations of the effectiveness of
material controls in the annual report. Key Service Providers
• Third party materials and links, including all factsheets,
presentations and promotional materials are reviewed by Manulife | CQS
Compliance before being circulated externally or uploaded onto the Company's
website.
• Manulife | CQS's Compliance Officer provides a compliance report for
the Board's review annually.
• Frostrow have extensive experience of the regulatory environment
applicable to investment trusts and produce a regular compliance report, which
includes any exceptions in the Company's compliance with applicable legal and
regulatory requirements.
• Key service providers with access to market sensitive information
receive regular and continuous training to ensure clear understanding of the
regulations.
Operational Risk - Key Service Providers The Company relies upon the services provided by third parties and is reliant Board and Committees
on the internal control systems of the Investment Manager and the Company's
↓ other service providers. • The operating effectiveness of third-party service providers is
monitored, and each provider updates the Board on its activities at each Board
Failures at these third parties could adversely impact the security and meeting.
maintenance of, inter alia, the Company's assets, dealing and settlement
procedures, and accounting records. • The Audit Committee receives, and reviews internal controls reports
such as ISAE 3402 on the description of controls placed in operation, their
Business interruption could mean inability to process financial transactions design and operating effectiveness from all key services providers on an
and wider negative impact on shareholders. annual basis.
This could result in reputational damage and reduced demand for the shares • The Management Engagement Committee reviews the performance and
with various knock-on negative impacts. controls of all its service providers annually.
Key Service Providers
• Manulife | CQS delivers a risk based internal audit plan which
covers different areas of its operations that are subject to internal audit,
including front, middle and infrastructure audits. Any areas of concern
relevant to the Company are discussed with the Audit Committee.
• The Depositary, BNP, maintains a daily record of the Company's
portfolio assets.
• The principal software packages used by Frostrow/BNP are standard
commercial systems.
• Manulife | CQS maintains separate records.
• Frostrow, Manulife | CQS, BNP and Equiniti have business continuity
plans, which are regularly reviewed and tested.
• Information systems allow for efficient operation when staff of CQS,
Frostrow, BNP and Equiniti are working remotely in a virtual office
environment.
• 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 further escalation of emerging geopolitical tensions
in the Middle East and elsewhere, and the wide share price discount to NAV per
share across the board in the investment trust sector. 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 2025. 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 people, social and governance matters and the environment on page
39 of the Annual Report.
Business model
The business model of the Company is described in more detail 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 on pages 30 and 31 of the Annual
Report.
Purpose, values and culture
The Board and the Investment Manager have taken time during the year to
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
The Company's investments are managed by CQS (UK) LLP, which was acquired by
Manulife Investment Management in April 2024 and now trades as Manulife | CQS
Investment Management. Ian Francis, Keith Watson and Robert Crayfourd are the
responsible portfolio managers. Further information about the portfolio
managers can be found on page 3 of the Annual Report.
CQS (UK) LLP is a global diversified asset manager, running multiple
strategies with, as at 30 June 2025, assets of US$17.0 billion under
management.
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
contract and the fees payable to the Investment Manager, together with the
standard of the other services provided. The Directors are satisfied with the
Investment Manager's ability to deliver satisfactory investment performance,
and the quality of other services provided. It is therefore their opinion that
the continuing appointment of the Investment Manager on the terms agreed is in
the interests of shareholders as a whole.
Previously, CQS (UK) LLP was entitled to receive a management fee of 1.2 per
cent. on net assets up to £150 million; 1.1 per cent. on net assets above
£150 million and up to £200 million; 1.0 per cent. on net assets above £200
million and up to £250 million; and, 0.9 per cent. on net assets above £250
million until the completion of the Board's Strategic Review of the Company at
the end of May 2025. Effective from 1 May 2025, the investment management fee
has been reduced to 1.0 per cent. on net assets.
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")
The Company has appointed CQS (UK) LLP, trading as Manulife | CQS Investment
Management, as the Company's alternative investment fund manager ("AIFM"). The
AIFM has 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. The Board appointed BNP Paribas as the Company's depositary.
Further UK AIFMD disclosures are shown on pages 97 and 98 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 annually rather
than repaid. The Company has an unsecured loan facility with BNP Paribas,
agreed on 13 September 2024 for a two-year period. 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 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 consider it is appropriate to adopt the going concern basis as at
30 June 2025;
● that the continuation vote should not be a factor to affect the
three-year period given the ongoing support of major shareholders. As part of
the proposed Tender Offer and proposed value enhancing initiatives announced
by the Company on 28 May 2025, and as approved by shareholders at the General
Meeting held on 25 June 2025, the postponement of the annual continuation vote
to the AGM in 2028 and a 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 risk in the portfolio where the
percentage of Level 1 listed investments held at the year end was 97.4% (2024:
95%);
● 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
facing the Company. These risks and their mitigations are set out on pages 22
to 27 of the Annual Report. 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, the Directors consider that the Company
has adequate resources to continue in operational existence for the
foreseeable future. The Board has considered a detailed assessment of the
Company's ability to meet its liabilities as they fall due, in the context of
the Company's investment objective, nature of the investment portfolio and
expenditure projections, and is satisfied 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 on page 4 of the Annual
Report show how the Company has performed against those KPIs, and a glossary
of terms and alternative performance measures is included on pages 88 to 90 of
the Annual Report.
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
To assess investment performance, the Board monitors the 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).
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 Company does not utilise
a formal benchmark but rather publishes its NAV per share performance
alongside two comparative 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 performance of the NAV and comparative indices are shown on page 1 with
statistics also shown on page 4 of the Annual Report. 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 position of
the Company's business as at the year end.
● Dividend per share
As part of the proposed 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 policy 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 8.03 pence per
share were declared (2024: 5.60 pence per share). The Company declared a 1
penny per share special interim dividend due to strong underlying core revenue
income from the Company's portfolio in respect of the year ended 30 June 2024.
● 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 2.0% (2024:
1.9%).
Dividend per share 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.
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 a UK listed investment trust, the Company has no direct 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
investment portfolio is also increasingly focusing on low greenhouse gas
businesses, commodities and solutions.
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 Company's 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
increasingly expected to engage with investee companies around these themes,
in line with the expectations of the UK Stewardship Code.
The Company's Investment Manager, CQS (UK) LLP (trading as Manulife | CQS
Investment Management), has in turn stated that they view ESG factors as a key
driver of financing costs, valuations and performance, while also being
capable of acting as a lever to shape and influence the world for generations
to come. The integration and assessment of ESG factors is a crucial part of
this commitment, and a key factor in their decision-making. Through embedding
ESG into the investment process, the Investment Manager seeks to enhance their
ability to identify value, investment opportunities and, critically, to
generate the best possible returns for their clients. CQS (UK) LLP is a
signatory to the internationally recognised Principles for Responsible
Investment ("PRI"), fully supporting all the PRIs.
Stakeholder Interests (S. 172 statement)
The following 'Section 172' disclosure, which is required by the Companies Act
2006 and the AIC Code, 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? How?
The benefit of engagement with the Company's stakeholders How the Board and the Company's service providers have engaged with the
Company's stakeholders
Clear communication of the Company's strategy and the performance against the The AIFM and the Investment Manager, on behalf of the Board, complete a
Company's objective can help the share price trade closer to its NAV per share programme of investor relations throughout the year.
which benefits shareholders.
An analysis of the Company's shareholder register is provided to the Directors
New shares may be issued to meet demand without net asset value per share at each Board meeting along with investor relations and marketing reports from
dilution to existing shareholders. Increasing the size of the Company can the Company Secretary and Administrator. The Board reviews and considers the
benefit liquidity as well as spread costs. marketing plans on a regular basis. Reports from the Company's broker are
submitted to the Board on investor sentiment and industry issues.
The Board operates an investment strategy designed to deliver strong
performance over the medium to longer term, based on exposure to valuable At each meeting the Board reviews movements in the Company's shareholder
commodity markets. register. There are regular interactions and engagement with shareholders
(including at the AGM). Regular feedback from shareholders is received from
While share buybacks will not necessarily prevent the discount from widening the Company's broker.
further, particularly in times of market volatility, they may, to a limited
extent, mitigate a widening trend. In addition, buybacks enhance the net asset Shareholders' rights are protected under the Company's Articles of Association
value per share for remaining shareholders, provide some additional liquidity which require any proposal that may materially change those rights to be
and help to dampen discount volatility which can damage shareholder returns. subject to prior approval by a majority of shareholders in general meeting.
The Board recognised the need to act in the interests of all shareholders In order to effectively communicate with as many shareholders as possible, the
following approach by the Company's major shareholder, Saba Capital Board with support from its advisers, inter alia undertook to:
Management, L.P., and ensure that as many of the Company's shareholders as
possible were made aware of the situation and the potential implications for ● As a foundation for the Company's campaign, the Board and its advisers
their investments. created a retail shareholder-focused 'messaging house', which was used across
investor presentations, press releases and official communications to
Following a comprehensive Strategic Review designed to identify a way forward shareholders;
to enhance value for all shareholders, the Board proposed to offer
shareholders a free choice between remaining invested in the Company with ● Developed a 'microsite' (http://www.cynprotectyourinvestment.com/)
value enhancing initiatives (an enhanced dividend, lower management fees), which was kept up-to-date and provided a dedicated channel for shareholders to
and/or exiting for cash through the Tender Offer. gain information ahead of general meetings and provide, so far as possible,
jargon-free information on the intricacies of Saba's proposals and the Board's
recommendations. The microsite also included a facility for shareholders to
register to be sent further information as it became available, such as help
with how and when to vote;
● As well as regular shareholder focused webinars with the portfolio
managers, a dedicated webinar was held to help ensure the Company's messaging
reached as many shareholders as possible. Over 200 shareholders took part and
allowed shareholders to ask questions of the Chairman and portfolio managers;
● The Board engaged advisers to engage with shareholders by telephone to
gauge voting sentiment, obtain feedback and offer further information on the
proposals and the Board's recommendations;
● The Company's messaging was distributed to a broad network of
financial journalists at national and trade publications;
● Edison Group were engaged to produce research and video material for
shareholders. Together, the material made over 19,000 impressions; and
● The Company engaged with major investment platforms to ensure voting
mechanics were fully available to shareholders and offer platforms guidance on
the unusual circumstances of the general meetings.
What? Outcomes and Actions
The key areas of engagement The actions, principal decisions and outcomes
Ongoing dialogue with shareholders concerning the strategy of the Company, Shareholders are provided with performance updates via the Company's website
performance and the portfolio. as well as the annual and half-year financial reports and monthly factsheets.
The Investment Manager and the Company Secretary and Administrator meet
Key mechanisms of engagement include: regularly with shareholders and potential investors to discuss the Company's
strategy, performance and portfolio. Both the Investment Manager and the
● The Annual General Meeting, whereby shareholders are invited to Company Secretary and Administrator also engage with the Press on the
attend, ask questions and vote; Company's behalf.
● The Chairman and non-executive directors make themselves available to Information on how to vote your Company shares on a selection of major
engage with shareholders; platforms can be found by following the link within the Notice of Meeting on
page 96 of the Annual Report.
● The Company's website hosts reports, video interviews with the
portfolio managers and monthly factsheets; and The Board reviews the Company's share price discount/premium on a daily basis
and in April 2024, following discussion with advisers, the Board agreed a
● One-on-one investor meetings facilitated by the Company Secretary and limited programme of purchases of its own shares. The Company bought back
Administrator who actively engage with professional investors, typically 728,557 shares in the financial year to 30 June 2024, and a further 2,002,114
discretionary wealth managers, some institutions and a range of execution-only shares in the financial year to 30 June 2025, with the most recent share
platforms. Regular engagement helps to attract new investors and retain buyback taking place on 31 October 2024. The discount had narrowed since the
existing shareholders, and over time results in a stable share register made Company started buying back shares in April 2024, but also as Saba reported
up of diverse, long-term holders. increases in their shareholding in the Company towards the end of the 2024
calendar year.
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 The Board consider that the considerable efforts that went into engaging with
explain in its announcement of the results of the AGM the actions it intends shareholders and ensuring the widest-possible audience had access to timely
to take to consult shareholders in order to understand the reasons behind any information resulted in the best possible outcome for shareholders, given the
significant votes against resolutions. Following the consultation, an update challenging circumstances, and the continuation of the Company.
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 At the General Meeting of the Company held on Tuesday, 4 February 2025, all
Board has taken and any actions or resolutions proposed. Requisitioned Resolutions were defeated on a poll by a majority of
shareholders. Over 59% of the votes cast were against Saba's Requisitioned
The Board considered the following options available to preserve value for all Resolutions, representing approximately 40% of the issued share capital. Total
shareholders: votes cast represented over 68% of the issued share capital. By contrast, just
8% of the Company's issued share capital was voted at the AGM held in December
● Maintaining the current investment policy and management arrangements, 2024.
given the best practice annual continuation vote, together with providing
liquidity to shareholders by means of buybacks, tenders and other similar The Company has been shortlisted among seven other investment trusts in the
actions; 'Best Shareholder Engagement' category of the AIC Shareholder Communications
Awards 2025. The results will be announced at an awards ceremony held in
● Introducing an increased dividend, to be funded in part by capital November.
growth;
Shareholders overwhelmingly voted in favour of the resolutions which enabled
● Pursuing further discount management mechanisms; the Company to undertake the Tender Offer and the change of annual
continuation votes at every annual general meeting to every two years, with a
● Providing a full cash exit at NAV for all shareholders; and postponement of continuation votes until the AGM to be held in 2028.
● If a suitable partner can be identified, to negotiate terms of a 45.72% of the Company's issued share capital was tendered, Saba's holding.
combination with another investment trust or open-ended investment company Continuing shareholders benefit from the value-enhancing initiatives put in
that would provide an ongoing investment opportunity with a natural resources place by the Board and measures put in place to provide a period of stability.
and energy focus, together with the option of a full cash exit at NAV for all Shareholders remaining invested in the Company will not bear the cost of the
shareholders. Tender Offer.
On 12 February 2025, the Company announced the receipt of a requisition served
on behalf of Saba for a second general meeting of shareholders. The Board has
engaged in a series of very constructive discussions with Saba, who agreed to
withdraw the requisition to enable the Board and its advisers to complete the
Strategic Review that was outlined in the circular to shareholders.
Who? - Stakeholder group: AIFM and Investment Manager
Why? How?
The benefit of engagement with the Company's stakeholders How the Board and the Company's service providers have engaged with the
Company's stakeholders
Engagement with the Company's Investment Manager is necessary to: Representatives of the AIFM attend each quarterly Board meeting and present a
report on investment performance and other related matters. Between meetings
● evaluate their performance against the Company's stated strategy and the Board maintains regular contact with the Investment Manager.
to understand any risks or opportunities this may present; and
The Audit Committee annually review reports from the AIFM's Money Laundering
● better understand the internal controls in place at Manulife | CQS. Reporting Officer and Compliance Officer to assess the adequacy and
effectiveness of both functions.
The Board ensures that the Investment Manager's ESG approach meets standards
set by the Board. The Board involved and took advice from the investment management team at each
stage of its Strategic Review, given their importance in maintaining the
In order to achieve, what the Board consider to be, the best possible outcome investment strategy and performance of the Company.
for shareholders as a result of the Board's Strategic Review, it was necessary
to seek extraordinary engagement with and support from the Company's
Investment Manager.
What? Outcomes and Actions
The key areas of engagement 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
Portfolio composition, performance, ESG matters, outlook, and business and investment activities. Manulife | CQS is also a signatory to the
updates. Principles for Responsible Investment, amongst other initiatives. Further
details of the Investment Manager's ESG related activities and reports can be
The integration of ESG into the Investment Manager's investment processes. found on page 39 of the Annual Report.
The Board sought advice from the investment management team on each of the The Tender Offer and value enhancing initiatives (as discussed under
options it assessed under the Strategic Review and the implications of each Stakeholder group: Shareholders).
option:
· Maintaining the existing investment policy and management
arrangements;
· Introducing an increased dividend;
· Pursuing further discount management mechanisms;
· Providing a full cash exit at NAV for all shareholders; and
· Exploring suitable partners for a combination that would provide
an ongoing investment opportunity with a natural resources and energy focus,
together with the option of a full cash exit at NAV for all shareholders.
Who? - Stakeholder group: Service Providers
Why? How?
The benefit of engagement with the Company's stakeholders How the Board and the Company's service providers have engaged with the
Company's stakeholders
As an externally managed investment company, the Company does not have Each of these contracts was entered into after full and proper consideration
employees. Its main stakeholders therefore comprise its shareholders and a by the Board of the quality and cost of the services offered, including the
small number of service providers. The Board has delegated a wide range of control systems in operation in so far as they relate to the affairs of the
activities to external agents, in addition to the Investment Manager. Company.
The Company contracts with third parties for other services including: The Directors have frequent engagement with the Company's other service
depositary, investment accounting & administration as well as company providers through the annual cycle of reporting and due diligence meetings or
secretarial and registrars. The Company ensures that the third parties to whom site visits by the Company Secretary and Administrator. This engagement is
the services have been outsourced complete their roles in line with their completed with the aim of maintaining an effective working relationship and
service level agreements and are able to continue to provide these services, oversight of the services provided.
thereby supporting the Company in its success and ensuring compliance with its
obligations. The Board regularly evaluates the performance of its third-party service
providers.
In order to achieve, what the Board consider to be, the best possible outcome
for shareholders as a result of the Board's Strategic Review, it was also The Board involved and took advice from its key service providers at each
necessary to seek extraordinary engagement with the Company's service stage of its Strategic Review, given their importance in supporting the
providers. operation of the Company.
What? Outcomes and Actions
The key areas of engagement The actions, principal decisions and outcomes
The Board met regularly with representatives of the Company Secretary and All service providers engaged and supplied requested information for the due
Administrator which attend every Board meeting to provide updates on risk diligence exercise to be completed.
management, accounting, administration and corporate governance matters.
Reviews of the Company's service providers in July 2025 were positive, and the
In August 2024, representatives of the Company Secretary and Administrator Directors believe their continued appointment is in the best interests of the
conducted an oversight visit to the Company's registrar, Equiniti, on the Company.
Board's behalf. An industry update, presentations on cyber security, dividend
payment processes, the shareholder register and online shareholder engagement The Audit Committee met with BDO LLP to review the audit plan for the year,
were received. agree their remuneration, review the outcome of the annual audit and to assess
the quality and effectiveness of the audit process. Please refer to the Audit
The Board sought advice from its key service providers on each of the options Committee Report beginning on page 55 of the Annual Report for further
it assessed under the Strategic Review and the implications of each option: information.
· Maintaining the existing investment policy and management The Tender Offer and value enhancing initiatives (as discussed under
arrangements; Stakeholder group: Shareholders).
· Introducing an increased dividend;
· Pursuing further discount management mechanisms;
· Providing a full cash exit at NAV for all shareholders; and
· Exploring suitable partners for a combination that would provide
an ongoing investment opportunity with a natural resources and energy focus,
together with the option of a full cash exit at NAV for all shareholders.
Who? - Stakeholder group: The Company's Lender
Why? How?
The benefit of engagement with the Company's stakeholders How the Board and the Company's service providers have engaged with the
Company's stakeholders
Investment companies have the ability to borrow with a view to enhancing Regular reporting to the lender with respect to adherence with loan covenants
long-term returns to shareholders. Engagement with the Company's lender and ad hoc meetings with the AIFM.
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 The AIFM engaged with the provider of the Company's previous loan facility in
complies with its loan covenants. advance of expiry in September 2024.
Following the year end, the 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.
What? Outcomes and Actions
The key areas of engagement The actions, principal decisions and outcomes
Continued compliance with covenants set out within the loan agreement between The Board ensures compliance with loan covenants throughout the year.
the Company and the lender.
As detailed on page 8 of the Annual Report , the Company entered into a
The AIFM sought quotations from the previous and alternative lenders. two-year agreement with BNP Paribas with improved commercial terms on 13
September 2024.
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 The Board met on 11 September 2025 to consider the reduction of the Company's
September 2026 should be reduced. 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 16 September 2025.
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 the Investment Manager's
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 42 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 41 to
44 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 2025
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 40 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 2025
Note to those who access this document by electronic means:
The Annual Report for the year ended 30 June 2025 has been approved by the
Board of CQS 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 2025 Year ended 30 June 2024
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held at fair value through profit or loss 9 - 6,425 6,425 - 6,095 6,095
Exchange (losses)/gains on foreign currencies - (118) (118) - 14 14
Income 2 2,571 1,324 3,895 6,426 768 7,194
Investment management fee 3 (391) (1,175) (1,566) (416) (1,248) (1,664)
Other expenses 4 (1,803) - (1,803) (976) - (976)
Net return before finance costs and tax 377 6,456 6,833 5,034 5,629 10,663
Finance costs 5, 11 (234) (701) (935) (311) (734) (1,045)
Net return before tax 143 5,755 5,898 4,723 4,895 9,618
Taxation 6, 11 (143) (25) (168) (454) (38) (492)
Net return for the year - 5,730 5,730 4,269 4,857 9,126
Basic and diluted return per ordinary share (pence) 8 0.00p 8.88p 8.88p 6.39p 7.27p 13.66p
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
Notes 2025 2024
£'000 £'000
Fixed assets
Investments at fair value through profit or loss 9 143,266 152,627
Current assets
Debtors 10 406 645
Cash at bank 2,404 2,952
2,810 3,597
Current liabilities
Creditors: amounts falling due within one year 11 (700) (658)
Bank loan 12 (9,000) (17,000)
Net current liabilities (6,890) (14,061)
Net assets 136,376 138,566
Capital and reserves
Called-up share capital 13 16,722 16,722
Treasury shares 13 (683) (182)
Special distributable reserve 21,449 27,127
Share premium 4,851 4,851
Capital reserve 94,037 88,307
Revenue reserve - 1,741
Equity shareholders' funds 136,376 138,566
Net asset value per ordinary share (pence) 14 212.56p 209.44p
Company number: 02978531
These Financial Statements were approved by the Board of Directors and
authorised for issue on 27 October 2025 and were signed on its behalf by:
Christopher Casey
Chairman
The Notes form part of these Financial Statements.
Statement of Changes in Equity
Notes Share Treasury Share Special distributable Capital Revenue Total
capital shares premium reserve reserve reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
For the year ended 30 June 2025
Balance at 30 June 2024 16,722 (182) 4,851 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 (683) 4,851 21,449 94,037 - 136,376
For the year ended 30 June 2024
Balance at 30 June 2023 16,722 - 4,851 28,571 83,454 2,962 136,560
Net return for the year - - - - 4,857 4,269 9,126
Shares bought back into treasury - (182) - (1,182) (4) - (1,368)
Dividends paid 7 - - - (262) - (5,490) (5,752)
Balance at 30 June 2024 16,722 (182) 4,851 27,127 88,307 1,741 138,566
The special distributable reserve, capital reserve (excluding the unrealised
losses on Level 2 and Level 3 investments detailed in Note 9) and the revenue
reserve are distributable by way of dividend. The Company's distributable
reserve balance is £136,347,000 (2024: £144,270,000) and the net
distributable reserve is £115,486,000 (2024: £117,175,000) after taking into
account the unrealised cumulative losses of £20,861,000 (2024: £27,095,000)
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
Notes 2025 2024
£'000 £'000
Operating activities
Investment income received(1) 3,633 6,366
Deposit interest received 80 112
Investment management fees paid (1,454) (1,662)
Other expenses (1,826) (911)
Net cash inflow from operating activities 433 3,905
Investing activities
Purchases of investments (37,869) (35,310)
Disposals of investments 53,984 37,587
Net cash inflow/(outflow) from investing activities 16,115 2,277
Financing activities
Equity dividends paid (4,284) (5,752)
Shares bought back into treasury (3,752) (1,368)
(Repayment of)/drawdown from credit facility 12 (8,000) 1,000
Loan interest paid (942) (981)
Net cash outflow from financing activities (16,978) (7,101)
Decrease in net cash (430) (919)
Reconciliation of net cash flow movement to movement in net cash
Decrease in net cash during the year (430) (919)
Foreign exchange (losses)/gains on cash (118) 14
Movement in net cash during the year (548) (905)
Opening cash balance at 1 July 2,952 3,857
Closing cash balance at 30 June 2,404 2,952
1 Net of withholding tax.
The Notes form part of these Financial Statements.
Notes to the Financial Statements
for the year ended 30 June 2025
1 Accounting policies
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 99 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
July 2022.
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 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 expected timings of
the cash flow and the level of certainty on 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, if material, 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. The fixed
return on a debt security is recognised on a time apportioned basis so as to
reflect the effective interest rate on each such security. 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. 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 - 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.
(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.
(l) Single segmental reporting
The Company is engaged in a single segment of business, being an investment
business, 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 or
unlisted 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, which sits within the
Company's AIFM and meets on a monthly basis to review developments in relation
to unquoted investments in the portfolio and assess whether adjustments are
required to reflect the latest fair value of those 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.
As illustrated above, the Company's valuation process for unquoted equities
involved significant judgements and estimates, which could have a material
impact on the reported balances at the year end.
As at 30 June 2025, the Company held £1,886,000 or 1.3% of the portfolio
(2024: £7,525,000 or 4.9%), in Level 3 investments, of which £1,364,000 or
1.0% of the portfolio relate to unquoted equity investments (2024: £6,830,000
or 4.5%) and the remaining £522,000 or 0.3% relate to unquoted warrants
(2024: £694,000 or 0.4%). Further details on valuation methodologies and
sensitivity analysis can be found in Note 9.
2 Income
2025 2025 2025 2024 2024 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Income from investments
UK dividend income 291 - 291 450 - 450
Preference share dividend income 466 - 466 799 - 799
Overseas dividend income 1,596 1,324 2,920 4,874 768 5,642
Fixed interest 137 - 137 191 - 191
2,490 1,324 3,814 6,314 768 7,082
Other income
Bank interest 81 - 81 112 - 112
Total income 2,571 1,324 3,895 6,426 768 7,194
3 Investment Management Fees
2025 2025 2025 2024 2024 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fee 391 1,175 1,566 416 1,248 1,664
The Company's Investment Manager is CQS (UK) LLP (trading as Manulife | CQS
Investment Management).
With effect from 1 May 2025, the investment management fee payable by the
Company was reduced to 1.0 per cent. of net assets per annum.
Previously, the Company's annual management fee was 1.2 per cent. on net
assets up to £150m; 1.1 per cent. on net assets above £150m and up to
£200m; 1.0 per cent. on net assets above £200m and up to £250m; and 0.9 per
cent. on net assets above £250m.
The balance due to Manulife | CQS for management fees at the year end was
£252,000 (2024: £140,000).
Investment management fees have been allocated 75% to capital and 25% to
revenue (2024: 75% capital and 25% revenue) in the Income Statement. This
capital and revenue split is reviewed by the Board annually.
4 Other Expenses
2025 2025 2025 2024 2024 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Secretarial and administration fees 266 - 266 201 - 201*
Directors' fees 193 - 193** 157 - 157
Employer's National Insurance contributions 14 - 14 6 - 6
Auditor's remuneration for the audit of the Company's financial statements 63 - 63 73 - 73
Tax advisor remuneration for tax services 72 - 72 31 - 31
Directors' and Officers' liability insurance 19 - 19 15 - 15
Registrar fees 39 - 39 23 - 23
Custody and depositary fees 91 - 91 79 - 79
Public relations 92 - 92 84 - 84
Broker fees 50 - 50 50 - 50
Stock exchange fees 29 - 29 22 - 22
Legal and professional fees*** 826 - 826 178 - 178
Other 49 - 49 57 - 57
1,803 - 1,803 976 - 976
* Frostrow Capital LLP was appointed on 22 November 2023 to provide the
Company with administration and Company Secretary services, as well as serve
as the Company's investor relations and marketing adviser. All service
provisions from Frostrow are included in a single fee figure.
** Directors' fees are higher in 2025 due to overlapping period between
the two new directors joining and the two directors retiring from, the Board,
and a one-off £15,000 payment to one of the Directors in compensation of 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 2025. Further details can be found in the Directors
Remuneration Report on page 51 of the Annual Report.
*** 2025 total 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. 2024 total includes £78,000 in relation to the renewal of the
Company's loan facility, £33,000 in relation to the appointment of two
non-executive directors and £15,000 in relation to the transition of the
Company's Administrator and Company Secretary.
The Company does not have any employees and no pension contributions were
payable in respect of any of the Directors.
5 Finance Costs
2025 2025 2025 2024 2024 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Interest on bank loan 234 701 935 245 734 979
Other interest (Note 11) - - - 66 - 66
234 701 935 311 734 1,045
Interest on the bank loan has been allocated 75% to capital and 25% to revenue
(2024: 75% capital and 25% revenue) in the Income Statement. This capital and
revenue split is reviewed by the Board annually.
6 Taxation
2025 2025 2025 2024 2024 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Corporation tax (Note 11) - - - 122 - 122
Overseas withholding tax 143 25 168 332 38 370
143 25 168 454 38 492
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% (2024: 25%). A
reconciliation of the total tax charge is set out below:
2025 2024
Total Total
£'000 £'000
Return on ordinary activities before taxation 5,898 9,618
Corporation tax at 25% (2024: 25%) 1,475 2,405
Effects of:
Non-taxable income (588) (1,594)
Non-taxable gains (1,938) (1,652)
Overseas withholding tax 168 370
Excess management expenses (deferred tax not recognised) 1,022 845
Non-taxable exchange (losses)/gains 29 (4)
Corporation tax - prior year adjustment (Note 11) - 122
Current year tax charge 168 492
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 2024 totalled
£5,471,000 (2024: £4,449,000) arising as a result of having excess
management expenses of £21,884,000 (2024: £17,798,000) and based on a
prospective tax rate of 25% (2024: 25%).
7 Dividends
2025 2024
Revenue Revenue
£'000 £'000
Amounts recognised as distributions to equity holders in the year:
Fourth interim dividend for the year ended 30 June 2024 of 1.82p (2023: 1.82p) 1,198 1,217
per share
Special interim dividend for the year ended 30 June 2024 of 1.00p (2023: 659 2,007
3.00p) per share
First interim dividend for the year ended 30 June 2025 of 1.26p (2024: 1.26p) 811 843
per share
Second interim dividend for the year ended 30 June 2025 of 1.26p (2024: 1.26p) 808 843
per share
Third interim dividend for the year ended 30 June 2025 of 1.26p (2024: 1.26p) 808 842
per share
4,284 5,752
Amounts relating to the year but not paid at the year end*:
Fourth interim dividend for the year ended 30 June 2025 of 4.25p (2024: 1.82p) 2,727 1,198
per share
Special interim dividend for the year ended 30 June 2025 of nil (2024: 1.00p) - 658
per share
Total 2,727 1,856
* Figures under the 2025 column above are calculated using the number
of voting shares (excluding shares held in treasury) in issuance of 64,157,838
as at the record date of 2 August 2025, and the comparatives under the 2024
column were calculated using the number of voting shares (excluding shares
held in treasury) in issuance of 65,809,800 as at the record date of 1 August
2025.
In accordance with FRS 102, the fourth and special 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
2025 2024
£'000 £'000
Revenue return - 4,269
Capital return 5,730 4,857
Total Return 5,730 9,126
Weighted average number of ordinary shares in issue 64,516,804 66,817,536
Revenue return per share (pence) 0.00 6.39
Capital return per share (pence) 8.88 7.27
Total return per share (pence) 8.88 13.66
There were no dilutive instruments issued by the Company for the years ended
30 June 2025 and 30 June 2024.
9 Investments
2025 2024
£'000 £'000
Equity shares 137,154 146,952
Preference shares 4,580 4,063
Fixed income securities 951 929
Warrants 581 683
143,266 152,627
All investments are designated at fair value through profit or loss at initial
recognition, therefore all gains and losses arising on investments are
designated at fair value through profit or loss.
Investments at fair value through profit or loss
2025 2024
£'000 £'000
Opening book cost 162,667 157,457
Opening investment holding gains (10,040) (7,992)
Opening fair value 152,627 149,465
Analysis of transactions made during the year
Purchase at cost 38,167 34,434
Sales proceeds received (53,953) (37,367)
Gains on investments 6,425 6,095
Closing fair value 143,266 152,627
Closing book cost 142,707 162,667
Closing investment gains/(losses) 559 (10,040)
Closing fair value 143,266 152,627
In line with the revised AIC SORP issued in July 2022, the presentations of
gains and losses arising from disposals of investments and gains and losses on
revaluation of investments have now been combined. Please see Accounting
Policies Note 1(a). 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.
2025 2024
Gains/(losses) on investments £'000 £'000
Realised (losses)/gains on sales of investments (4,174) 8,397
Unrealised gains/(losses) on investments 10,599 (2,302)
Gains on investments 6,425 6,095
During the year the Company purchased £38,167,000 (2024 restated:
£35,310,000) of investments and incurred a total transaction cost of £23,000
(2024: £33,000). Disposals of investments amounted to £53,953,000 (2024
£37,621,000) with a total transaction cost of £46,000 (2024: £34,000). As
at 30 June 2025, £4,000 of the disposal proceeds were receivable (2024:
£34,000).
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 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 1 Level 2 Level 3 Total
As at 30 June 2024 £'000 £'000 £'000 £'000
Investments at fair value through profit or loss
Equities 140,121 - 6,831 146,952
Preference shares 4,063 - - 4,063
Fixed income securities - 918 11 929
Warrants - - 683 683
Total 144,184 918 7,525 152,627
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.
Coppernico Metals commenced trading on the Toronto Stock Exchange in August
2024 and was transferred from Level 3 investment to Level 1 during the year at
a valuation of £1,445,000. There has been no other transfer of financial
assets between fair value levels during the year (2024: 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 2025, the Company held two unquoted equity investments,
respectively Leo Lithium (£932,000), whose share trading on the Australian
Securities Exchange (ASX) has been suspended since September 2023, and
Firefinch (£431,000), whose shares were delisted from the ASX on 1 July 2024
and its sole investment remaining is a stake in Leo Lithium.
Leo Lithium has been suspended from trading on the Australian Stock Exchange
("ASX") since September 2023 and has since then disposed its 40% holding in
the Goulamina project in Mali to the 60% join venture partner, China Gangfeng
Lithium. Cash flow from the disposal was received in two traches with the
first being received in November 2024 and the second being received in July
2025. Cash from the first trance has been paid to shareholders by way of
dividends, and Leo Lithium has been considering either to fully distribute
cash from the second tranche to shareholders or use that cash to acquire
suitable projects to continue its operations and listing. The ValCo valued Leo
Lithium using a probability weighted approach, assuming 20% probability of
receiving cash in full and 80% probability of the cash being reinvested,
discounted by 63%, which is based on the last capital raise to current
valuation impact as a baseline guidance.
The only remaining assets in Firefinch is a stake in Leo Lithium plus cash and
therefore the Company values Firefinch on a look through basis. Due to the
uncertainty over Leo Lithium's future strategic plans, a 50% discount has been
applied on Firefinch's distributable value attributable to Leo Lithium.
A 10% decrease in the valuation of the unquoted equity investments would
result in a £136,000 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.
On 11 September 2025, Leo Lithium announced that no suitable projects which
serve the best interest of shareholders had been identified and therefore the
cash received in tranche 2 would be distributed to shareholders, via two
dividends, with an expected timetable of Q4 2025. This announcement has the
impact of lifting the valuations of Leo Lithium by approximately 68% from
£932,000 to £1,566,000, and on 14 October 2025 the Company received circa.
£1,029,000 (AUD 2,521,000) as the first of the two dividends. These changes
are treated as a non-adjusting post balance sheet event and therefore no
adjustments to the reported valuation has been made.
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 2025, the fair value of warrants held by the Company was
£581,000 (2024: £683,000). 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 £58,000 (2024: a reduction of £68,000). 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 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
2025 2024
£'000 £'000
Prepayments and accrued income 72 331
Overseas withholding tax recoverable 252 254
Other debtors 4 34
VAT recoverable 78 26
406 645
11 Creditors: Amounts Falling Due Within One Year
2025 2024
£'000 £'000
Amounts due to brokers - 116
Other creditors 578 420
Corporation tax 122 122
700 658
Included within other creditors is £252,000 (2024: £140,000) 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
2025 2024
£'000 £'000
Bank loan 9,000 17,000
The Company has a secured loan facility with BNP Paribas ("BNP"), on which
drawdowns attract an interest rate of Sterling Overnight Index Average
("SONIA") plus 1.35%. As at 30 June 2025, £9 million was drawn down at an
indicative rate of 5.6% fixed until 12 September 2025 (2024: £17 million was
drawn down at an indicative rate of 6.3% fixed until 13 September 2024).
Covenant conditions under the BNP facility are 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 is rolled over every three months and can be cancelled at
any time.
As at the date this Report was approved, £11.5 million was drawn down under
this facility at an indicative rate of 5.6% fixed until 12 December 2025.
13 Share Capital
2025 2024
£'000 £'000
Allotted, called up and fully-paid:
64,157,838 (2024: 66,159,952) ordinary shares of 25p each 16,039 16,540
2,730,671 (2024: 728,557) ordinary shares held in treasury 683 182
66,888,509 (2024: 66,888,509) total ordinary shares of 25p each 16,722 16,722
No shares were issued by the Company during the year (2024: nil).
During the year, the Company bought back 2,002,114 shares to be held in
treasury at a cost of £3,636,000 (2024: £1,368,000). Following the year end,
the Company bought back a further 8,800,000 shares into treasury and
20,534,059 shares for cancellation pursuant to the Tender Offer. Between 29
September and 24 October 2025, the latest practicable date prior to the
publication of this Report, the Company sold 265,000 shares from treasury. As
at 24 October 2025 the Company had 46,354,450 shares in issue, including
11,265,671 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 Board normally seeks to
limit gearing to 25% of net assets. The maximum gearing during the course of
the year was 14% and it was 4.8% at 30 June 2025.
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 £136,376,000
(2024: £138,565,000) and on 64,157,838 (2024: 66,159,952) ordinary shares,
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 2025 and 30 June 2024.
15 Financial Instruments
The Company's financial instruments comprise its investment portfolio, cash
balances, bank facilities and 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 held at fair value. For listed securities trading actively, fair value is
considered to be equivalent to the most available recent bid price. Where
listed securities are not trading actively, multiple broker quotes are
referencing to estimate fair value. For unlisted securities, this 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:
2025 2024
£'000 £'000
Financial assets
Investments 143,266 152,627
Cash at bank 2,404 2,952
Accrued income 50 308
Other debtors 356 337
Financial liabilities
Bank loan 9,000 17,000
Amounts due to brokers - 116
Other creditors 700 543
The bank loan balance was due for renewal on 12 September 2025 (2024: 13
September 2024) and the related interest payable until renewal was £124,000
(2024: £264,000).
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 Board'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 on pages 19 to 21 of the Annual Report.
If the investment portfolio valuation were to fall by 5% at 30 June 2025
(2024: 5%), the impact on the profit or loss and the net asset value would be
a reduction of £7,163,000 (2024: a reduction of £7,631,000). 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 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. 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.
Returns from bonds are fixed at the time of purchase, as the fixed coupon
payments are known, as are the final redemption proceeds.
Consequentially, if a bond is held until its redemption date, the total return
achieved is unaltered from its purchase date. However, over the life of a bond
the market price at any given time will depend on the market environment at
that time. Therefore, a bond sold before its redemption date is likely to have
a different price from its purchase level and a profit or loss may be
incurred.
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 would be a reduction of £66,000 (2024: a reduction of £140,000). 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:
2025 2024
Weighted Weighted
average average
2025 period for 2024 period for
Weighted which the Weighted which the
average rate is average rate is
2025 interest fixed 2024 interest fixed
£'000 rate (%)* (years) £'000 rate (%)* (years)
Assets:
Fixed income securities 951 7.6 0.7 929 7.6 1.7
* 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 effect, unfavourable or favourable, on the
returns otherwise experienced on the investments made by the Company. 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 2025 and 30 June 2024
were as follows:
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)
Sensitivity Sensitivity
Impact Impact
Net Sterling Sterling
current weakens by strengthens
Investments Cash assets Total 5% by 5%
30 June 2024 £'000 £'000 £'000 £'000 £'000 £'000
Canadian Dollar 53,683 205 41 53,929 2,838 (2,568)
US Dollar 36,464 81 7 36,552 1,924 (1,741)
Australian Dollar 34,730 95 147 34,972 1,841 (1,665)
Norwegian Krone 11,175 423 - 11,598 610 (552)
Euro - 8 145 153 8 (7)
Brazilian Real - 26 - 26 1 (1)
136,052 838 340 137,230 7,222 (6,534)
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 £6,001,000 (2024: a
reduction of £6,534,000). 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 £6,634,000 (2024: an increase of
£7,222,000). 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:
2025 2024
£'000 £'000
Fixed interest investments 951 929
Cash at bank 2,404 2,952
Interest, dividends and other receivables 406 645
3,761 4,526
As at 30 June 2025 and as at 30 June 2024 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.
The cash held by the Company and all the assets of the Company which are
traded on a recognised exchange are 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 2025 and as at 30 June 2024. The Company's largest single holding
represented 8.2% of its total investments as at 30 June 2025 (2024: 7.1%).
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 2025 £'000 £'000 £'000 £'000
Current liabilities 700 - - 700
Bank loan (including accrued interest) 9,124 - - 9,124
9,824 - - 9,824
More than
Three three months
months but less than More than
or less one year one year Total
30 June 2024 £'000 £'000 £'000 £'000
Current liabilities 543 - - 543
Bank loan (including accrued interest) 17,264 - - 17,264
17,807 - - 17,807
16 Net Debt Reconciliation
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)
As at Currency As at
30 June 2023 differences Cash flows 30 June 2024
£'000 £'000 £'000 £'000
Cash at bank 3,857 14 (919) 2,952
Bank loan (16,000) - (1,000) (17,000)
(12,143) 14 (1,919) (14,048)
17 Significant Interests
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%
Valuation Ownership
Investments as at 30 June 2024 £'000 %
REA Holdings 9% 31/12/49 4,063 7.2%
Calidus Resources 1,690 3.6%
Newcore Gold 1,031 3.2%
Galena Mining 707 7.1%
Ascendant Resources 550 12.7%
TDG Gold 414 5.0%
GT Resources 295 3.3%
Castile Resources 288 3.1%
Odyssey Gold 263 3.5%
18 Related Party Transactions and Transactions with the Investment Manager
The following are considered related parties: the Board of Directors (the
"Board") and CQS (UK) LLP (trading as Manulife | CQS Investment Management)
(the "Investment Manager").
Details of the fee arrangement with the Investment Manager are included in
Note 3.
There are no other transactions with the Board other than aggregated
remuneration for services as Directors as disclosed in the Directors'
Remuneration Report on pages 51 to 53 of the Annual Report, and as set out in
the Note 4 to the accounts. The beneficial interests of the Directors in the
ordinary shares of the Company are disclosed on page 53 of the Annual Report.
The balance due to Directors for fees at the year end was £nil (2024: £nil).
19 Post Balance Sheet Events
Tender Offer
On 1 July 2025, the Company announced that a total of 29,334,059 shares,
representing 45.72% of the shares in issue (excluding shares held in treasury)
were validly tendered. Going forward, the Company and shareholders will
benefit from the following value-enhancing initiatives put in place by the
Board:
· a reduction of investment management fee with backdated effect from 1
May 2025 to a flat 1 per cent. per annum of the NAV of the Company (a 20 basis
point reduction on the previous highest tier of fee);
· the adoption of an enhanced annual dividend of circa 8 per cent. of
NAV via a quarterly dividend policy of 2 per cent. of the preceding
quarter-end NAV per share using capital reserves as necessary; and
· in order to provide shareholders who remain invested in the Company
after the Tender Offer with a period of stability, a postponement of the next
continuation vote until the AGM to be held in 2028 and biennial continuation
votes thereafter, in accordance with good governance standards and as approved
by shareholders at the General Meeting.
The Company has also entered into a Standstill Agreement with Saba Capital
Management, L.P. ("Saba") until the 2028 AGM, pursuant to which it has agreed,
amongst other things: that Saba shall not, and shall procure that its
affiliates shall not, during the Standstill Period (i) require the Board to
convene a general meeting of the Company pursuant to section 303 of the
Companies Act; or (ii) exercise any voting rights available to remove, or
publicly propose the removal of, any member of the Board. In addition,
following the completion of the Tender Offer until the expiry or termination
of the Standstill Period, Saba shall not, and shall use its best endeavours to
procure that its affiliates shall not, vote against the recommendation of the
Board on any other resolutions at any general meeting or annual general
meeting of the Company.
All investments in the Tender Pool have now been realised. On 30 September
2025, the Company announced a Tender Price of 208.33 pence per Tender Exit
Share and payment of these proceeds to shareholders who validly elected to
participate in the Tender Offer has now been fully settled. Cavendish
purchased, as principal, the 29,334,059 shares validly tendered under the
Tender Offer at the Tender Price. Following completion of those purchases,
Cavendish then sold all the Tender Exit Shares back to the Company at the
Tender Price pursuant to the Repurchase Agreement by way of an on-market
transaction on the main market for listed securities of the London Stock
Exchange. The Company kept 8,800,000 shares bought back in treasury with the
remainder cancelled.
Dividend declaration
The fourth interim dividend of 4.25 pence per share in relation to the year
ended 30 June 2025 was announced on 15 July 2025 and paid on 1 September 2025
to shareholders on the register on 1 August 2025, having an ex-dividend date
of 31 July 2025.
There are no other post balance sheet events which would require adjustment of
or disclosure in the Financial Statements.
Loan facility
On 11 September 2025, the Board met to consider the reduction of the Company's
loan facility and determined to voluntarily decrease the facility limit from
£25 million to £15 million.
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.
Ye Y
ar e
en a
de r
d e
n
d
e
d
30 3
Ju 0
ne J
20 u
25 n
e
2
0
2
4
Total non-special interim dividends paid and declared (pence) 8. 5
03 .
6
0
Closing share price (pence) 19 1
9. 8
50 9
.
0
0
Dividend yield 4. 3
0% .
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 Y
e
a
r
e
n
d
e
d
30 June 2025 3
0
J
u
n
e
2
0
2
4
£'000 £
'
0
0
0
Cash at bank 2,404 2
,
9
5
2
Bank loan (9,000) (
1
7
,
0
0
0
)
Net debt (6,596) (
1
4
,
0
4
8
)
Net asset value 136,376 1
3
8
,
5
6
6
Gearing 4.8% 1
0
.
1
%
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 (209.44p) and closing NAV per share
(212.56p), 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 ended Year ended 5 years ended
30 June 2025 30 June 2024 30 June 2025
Opening NAV per share (pence) 209.44 204.16 98.64
Closing NAV per share (pence) 212.56 209.44 212.56
Percentage change in NAV per share 1.5% 2.6% 115.5%
Impact of dividend reinvestment 3.2% 4.6% 40.4%
NAV per share total return 4.6% 7.2% 155.8%
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 suffered within underlying investee funds, costs of buying and selling
investments, interest costs, taxation and the costs of buying back or issuing
ordinary shares.
Ye Y
ar e
en a
de r
d e
n
d
e
d
30 3
Ju 0
ne J
20 u
25 n
e
2
0
2
4
Total expenses (per Note 3 and 4) (£'000) 3, 2
36 ,
9 6
4
0
Less non-recurring expenses - Strategic Review (£'000) (7 -
14
)
Ongoing expenses (£'000) 2, 2
65 ,
5 6
4
0
Average net assets value (£'000) 13 1
1, 3
29 6
0 ,
9
1
9
Ongoing charges ratio 2. 1
0% .
9
%
Share Price Capital Return The movement between opening share price (189.00p) and closing share price
(199.50p), 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 ended Year ended 5 years ended
30 June 2025 30 June 2024 30 June 2025
Opening share price (pence) 189.00 169.50 79.30
Closing share price (pence) 199.50 189.00 199.50
Percentage change in share price 5.6% 11.5% 151.6%
Impact of dividend reinvestment 3.7% 5.6% 55.2%
Share price total return 9.3% 17.1% 206.8%
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 Y
e
a
r
e
n
d
e
d
30 June 2025 3
0
J
u
n
e
2
0
2
4
Closing NAV per share (pence) 212.56 2
0
9
.
4
4
Closing share price (pence) 199.50 1
8
9
.
0
0
Share price discount to NAV per share 6.1% 9
.
8
%
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 2025 are extracted from the Annual
Report and financial statements for the year ended 30 June 2025 and do not
constitute the statutory accounts for the year. The Annual Report and
financial statements for the year ended 30 June 2025 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 2024 are extracted from the
published Annual Report and financial statements for the year ended 30 June
2024 and do not constitute the statutory accounts for that year. The Annual
Report and financial statements for the year ended 30 June 2024 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 (mailto:cosec@frostrow.com)
Tel: 0203 709 2408
Investment Manager
Manulife | CQS Investment Management
Craig Cleland
Email: contactncim@cqsm.com (mailto:contactncim@cqsm.com)
Tel: 0207 201 5368
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. END FR FLFVAIFLDFIE
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