CQS Natural Resources Growth and Income PLC Reports 4.6% NAV Return and Strategic Enhancements in FY2025

FY2025 results: resilient NAV, stronger share price and a beefed‑up dividend

CQS Natural Resources Growth and Income PLC has posted a steady year in tricky markets. For the 12 months to 30 June 2025, net asset value (NAV) total return was 4.6%, while the share price total return came in at 9.3%. Both comfortably beat the Company’s comparators, with the MSCI World Metals & Mining down 4.5% and MSCI World Energy down 7.7% over the same period.

The Board has also pushed through a series of strategic enhancements: a flat 1.0% management fee from 1 May 2025, a new target dividend of roughly 8% of NAV paid quarterly (2% of quarter‑end NAV per share), and a reset to continuation votes, now biennial from 2028. A large tender offer provided a cash exit for those who wanted it.

Key number	FY2025
NAV total return	4.6%
Share price total return	9.3%
NAV per share	212.56p
Share price (year end)	199.50p
Discount to NAV	6.1% (vs 9.8% in 2024)
Dividend per share	8.03p (yield 4.0%)
Gearing	4.8% (vs 10.1% in 2024)
Ongoing charges ratio	2.0%

Beating weak sector indices when it mattered

Total return means the combination of capital growth and dividends. Against falling sector comparators, a positive NAV total return is a solid result. The managers attribute outperformance to a higher precious metals allocation and a rebound in uranium equities towards the year end. Sterling strength made life harder, so the positive outcome deserves some credit.

The five‑year picture is striking: NAV total return of 155.8% and share price total return of 206.8%, both ahead of the Company’s comparators over the period.

Portfolio positioning: gold and uranium to the fore

The Company went into precious metals in size. By commodity at 30 June 2025: precious metals 44.8% (up from 32.2%), uranium 14.8%, oil & gas 13.5%, shipping 7.3%, base metals 6.1% and copper 4.4%. That shift away from income‑heavy shipping towards gold helped capital returns but reduced portfolio income.

Top holdings include NexGen Energy (8.2% of investments), Emerald Resources (5.7%), Greatland Gold (4.9%) and West African Resources (4.5%). On the negative side, lithium exposure – notably Sigma Lithium – was a drag after a sharp commodity price fall. The managers have begun to add back selectively after the correction.

Income and the new 8% of NAV dividend policy

Shareholders received 8.03p per share for the year, up 21.7% from 6.60p in 2024. A fourth interim of 4.25p was declared on 15 July and paid on 1 September, being the first under the enhanced policy of 2% of the prior quarter‑end NAV per share. The Board is explicit that capital reserves will be used as necessary to support this level – sensible disclosure given revenue earnings per share were 0.00p (down from 6.39p in 2024) due to the portfolio shift into lower‑yielding precious metals.

My take: a variable dividend tied to NAV should feel more predictable quarter to quarter, but income investors should note it is not fully covered by revenue in the current positioning. That is not inherently bad for a total return trust; it’s just important to understand how the sausage is made.

Gearing, facilities and costs: conservatism after a volatile year

Gearing – borrowing to enhance returns – was dialled back from 10.1% to 4.8% amid market and corporate uncertainty. The Company moved its £25 million facility to BNP Paribas in September 2024 and, following the tender, voluntarily reduced the limit to £15 million with effect from 16 September 2025. £9 million was drawn at year end; £11.5 million was drawn as at the report date.

Ongoing charges were 2.0% (2024: 1.9%). Other expenses were elevated by £714,000 of legal and professional costs linked to the requisitioned meeting and the subsequent Strategic Review. The fee cut to a flat 1.0% of NAV should help net returns going forward.

Capital allocation: buybacks, tender offer and treasury sales

Buybacks pre‑tender were modest but helpful: 2,002,114 shares bought into treasury at an average 11.2% discount, adding 0.4% to NAV. The headline corporate action was the Tender Offer, approved on 25 June and closed on 30 June: 29,334,059 shares were validly tendered, representing 45.72% of shares in issue (excluding treasury). Post completion, 8,800,000 tendered shares were kept in treasury and the remainder cancelled.

Post year end, the share price strength – up 33.3% to 266p by 24 October – allowed 265,000 treasury shares to be sold at an average 314.75p, at a premium of at least 2% to NAV. The Board now aims to use buybacks to keep the discount in single digits in normal conditions. That’s the right objective for a closed‑end fund with a clear strategy.

Governance reset and manager line‑up

Two shareholder requisitions from Saba Capital culminated in a clear defeat of the first set of resolutions, withdrawal of the second, and a comprehensive Strategic Review. Outcomes: the fee cut, the enhanced dividend, biennial continuation votes from 2028, and a standstill agreement with Saba until after the 2028 AGM. It’s a pragmatic settlement that gives the managers a clearer runway.

There’s one team change: Ian “Franco” Francis steps back from co‑portfolio management on 28 October to focus on fixed interest mandates. With non‑equity exposure now only 2.3% of the portfolio, Robert Crayfourd and Keith Watson continue as joint portfolio managers.

What could move the shares next

• Commodity leadership: gold and silver were up strongly post period, but precious metals equities are still described as attractively valued by the managers. If that gap closes, NAV could benefit.
• Uranium demand: the review cites improving fundamentals and potential utility buying as inventories tighten. The top holding, NexGen Energy, is a clear lever.
• Discount control: with the Board targeting a single‑digit discount and willing to buy back, share price/NAV alignment should improve through the cycle.
• Macroeconomic cross‑winds: tariffs and muted industrial demand have weighed on base metals and oil. The trust’s lower exposure here limits the drag but adds concentration risk to precious metals.

My take for retail investors

• Positive: Outperformance versus weak sector comparators, a tighter discount (6.1% from 9.8%), and a simpler, lower fee of 1.0% p.a. are all shareholder‑friendly.
• Supportive income: The 8% of NAV dividend is generous and now embedded in policy, but it will lean on capital reserves while income generation is lower.
• Balanced risk: High precious metals and uranium exposure has worked and could continue to, but it increases volatility. Gearing is modest, which helps risk control.
• Smaller, cleaner structure: The tender offer reduced the Company’s size but also cleared the register and delivered stability via the standstill agreement and continuation timetable.

Overall, this reads like a trust that used a choppy year to sharpen its proposition: a focused portfolio in areas with strong tailwinds, a clearer dividend framework, and better discount management. If you want geared exposure to gold and uranium with active stock‑picking, this is very much that – just go in with eyes open on volatility and the fact that income is being driven by a total‑return policy rather than underlying dividends alone.