Annual Financial Report

RNS Number : 4748Q

CQS Natural Resources Grwth&Inc PLC

27 October 2021

A copy of the Company's Annual Report will shortly be available on the Company's website

(NCIM - City Natural Resources High Yield Trust - Fund Page), on the National Storage Mechanism (https://data.fca.org.uk/#/nsm/nationalstoragemechanism) and will also be provided to those shareholders who have requested a printed or electronic copy

Final Results

CQS NATURAL RESOURCES GROWTH AND INCOME PLC

CQS Natural Resources Grwth&Inc PLC

27 October 2021

CQS NATURAL RESOURCES GROWTH AND INCOME PLC

Annual Results Announcement

for the year ended 30 June 2021

Financial Highlights

Total Return	Year to 30 June 2021	Year to 30 June 2020	Period from 1 July 2016 to 30 June 2021
Net asset value	83.10%	(10.62)%	68.24%
Ordinary share price	109.63%	(5.89)%	112.28%
Composite index	27.52%	5.81%	110.41%
EMIX Global Mining Index (sterling adjusted)	32.47%	6.93%	133.75%
Credit Suisse High Yield Index (sterling adjusted)	3.47%	1.17 %	37.32%

Capital Values	30 June 2021	30 June 2020	% change period
Net asset value per share (pence)	172.40p	98.64p	74.78%
Ordinary share price (mid market) (pence)	160.50p	79.30p	102.40%

Revenue and Dividends	30 June 2021	30 June 2020	% change period
Revenue earnings per ordinary share	3.10p	3.35p	(7.46)%
Dividends per ordinary share	5.60p	5.60p	-%
Dividend Yield*	3.49%	7.1%
Discount* (difference between share price and fully diluted net asset value)	6.91%	19.61%
Gearing*
Gearing provided by bank loan	11.37%	18.2%
Ongoing charges* (as a percentage of average shareholders' funds)	1.8%	1.8%

Period's Highs/Lows	Year to 30 June 2021 High	Year to 30 June 2021 Low
Net asset value per share (pence)	185.20p	98.70p
Ordinary share price (mid market) (pence)	179.75p	79.40p
Discount	22.25%	0.91%

Dividend History	Rate	xd date	Record date	Payment date
Fourth interim 2021	1.82p	29 July 2021	30 July 2021	31 August 2021
Third interim 2021	1.26p	29 April 2021	30 April 2021	28 May 2021
Second interim 2021	1.26p	21 January 2021	22 January 2021	26 February 2021
First interim 2021	1.26p	22 October 2020	23 October 2020	30 November 2020
Total for year ending 2021	5.60p
Fourth interim 2020	1.82p	23 July 2020	24 July 2020	28 August 2020
Third interim 2020	1.26p	23 April 2020	24 April 2020	29 May 2020
Second interim 2020	1.26p	23 January 2020	24 January 2020	28 February 2020
First interim 2020	1.26p	24 October 2019	25 October 2019	29 November 2019
Total for year ending 2020	5.60p

* A glossary of the terms, including alternative performance measures, used can be found below.

Chairman's Statement

Overview

The year to 30 June 2021 saw a very positive turnaround for your Company. Globally, economies have been learning to deal with the Coronavirus pandemic and coordinated

Governmental stimulus has provided a background that has ensured that commodities have been in demand.

Shareholder returns this year have been excellent and I would like to thank our team of investment managers for sticking with their convictions and continuing to back their portfolio of mid and small capitalisation investments. Their investment report below provides a good summary of the factors influencing their decisions and both the team and the Board believe there is a good prospect of further growth in the natural resources markets.

Investment, Share Performance and Discount

The NAV total return at 30th June was an impressive return of 83.1% which compares to an increase in the composite benchmark of 27.5%. The composite benchmark is made up of an 80% weighting to the EMIX Global Mining Index which returned 32.5% and a 20% weighting to the Credit Suisse High Yield Index which rose by 3.5%.

The Company's shares also had a very good year with the share price rising from 79.3p as at 30 June 2020 to 160.5p at the end of June this year. With dividends reinvested this results in a total return of 109.6%

The discount between NAV and the share price reduced as a result of the rising share price - as at 30 June 2021. The Company's shares were trading at a discount of 6.9%.

Dividends and Income

Income and dividends have always been a focus of the Company and are now 2.8 times the amount paid per share in 2004.

The Board considers that the dividend policy is attractive to shareholders and provides an element of share price stability especially at a time when other companies have been forced to cut dividends. Therefore, we have decided to continue to pay quarterly dividends this year totalling 5.6p per share, which is an equal payout to the previous year.

Since the Manager is focused on generating capital growth and income from the portfolio the dividend may not always be completely covered by income. One of the benefits of being a closed ended structure is that in those circumstances the Board is able to use distributable reserves to meet any shortfall. In the current year to 30 June 2021 earnings per share were 3.10p per share which meant that 2.5p of dividends were covered by the Company's capital reserves.

The yield on the Company's shares was 3.5% as at 30 June 2021.

Gearing

As at 30 June 2021 the gearing was 11.37% and the amount drawdown under the Scotiabank facility was £16 million. The facility has been renewed for a further two-year period on similar terms and as at 25 October the gearing was 9.3%.

Annual General Meeting

The business of the AGM is summarised in the Directors' Report below. The AGM will be held at One Fleet Street Place, London, EC4M 7WS at 11.00am on Tuesday 14 December 2021. With Covid-19 restrictions easing we hope to see shareholders at the AGM in the usual way. 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

Climate change is now the dominant investment theme as the coronavirus pandemic appears to be waning, albeit with the variants causing further setbacks to global economic recovery.

Global Energy prices are a further warning that the transition to a low carbon economy will continue at pace which provides a scenario in which metals and mining play a part in the solution.

The Managers have clearly set out the supply and demand factors in their report and have positioned the Fund to take advantage of these opportunities with particular emphasis on copper as well as other base metals.

In addition there is a significant allocation to precious metals to guard against any unforeseen shocks to global growth and inflationary pressures.

Since the Fund's year end in June the market environment has been unsettled nevertheless the net asset value has increased by 16.18% to 200.29 per share as at 22 October 2021.

The share price has increased to 169.14p per share as at 22 October 2021 which does not fully reflect the increased NAV.

The Board has continued confidence in our Manager, the CQS Group who are supported by extensive research capabilities, to continue to steer us through these difficult times.

I would like to conclude again by extending my thanks to all shareholders for their continued support.

Richard Prickett

Chairman

25 October 2021

Investment Manager's Review

Introduction

This past year proved a strong one for commodities as the world recovered from the global Covid-19 pandemic. The initial collapse across all asset classes in March 2020 shifted to a rapid and sustained increase in pricing across the sector.

The Company's Net Asset Value materially outperformed global mining and energy indices over the financial year to end-June rising 83.1% over the period in total return terms. Synchronised global Covid-19 stimulus programmes and the rollout of vaccines supported an easing in lockdown measures across the sector. Together with lingering supply side constraints these factors contributed to the strong performance. Towards the end of our financial year a shift in expectation for a tightening in central bank monetary policy, in an attempt to contain inflationary pressures, began to weigh on the sector.

Supply struggling to keep pace with demand surge

Metal prices have benefitted from a release of pent-up demand and a catch-up on deferred work boosted by an increase in consumer spending afforded by a higher savings rate during lockdown. This was aided as working from home became common place and outgoings on services, commuting and holidays were curtailed. Demand was augmented by largescale Covid-19 relief programmes implemented globally and in unison, directed at resource intensive infrastructure programmes with a noticeable tilt towards the green energy transition. In addition to such investment, house sales and home improvements increased worldwide. Even as the balance of consumer spending shifts back towards services, expectations are that infrastructure programs will continue to support demand for resources.

While demand was impacted as economies went through lock-down so was supply with related mine shutdowns, border closures and logistics disruptions all impacting the flow of materials, products and labour. This caused production across most metals to decline. While production is now returning, the recovery in output has lagged booming demand growth and pricing of industrial commodities remains encouraging.

Over the last few years we have previously highlighted the lack of new supply in the pipeline, as shareholders push for dividend returns over expansionary capital expenditure. This is a very powerful tailwind for resources, as supply discipline remains across most parts of the sector. In addition, corporate Environmental, Social and Governance, or ESG matters are also having a significant impact on corporate strategies, requiring companies to thoroughly examine and address any changes necessary to clean-up current operations and ensure sound asset governance at the expense of investing in expansion. This is also relevant in China, where such movement is more socially than shareholder led, as a result of which polluting capacity is being shut or curtailed, effectively reducing domestic supply. This is especially prevalent in smelting, with the likes of energy intensive and predominantly coal powered aluminium amongst one of the most polluting industries.

The environmental theme is perhaps the most powerful trend in commodities today. It is harder than ever to permit a new mine. Of note, China's environmental focus is not driven by a need to win votes over the next election cycle, but by a longer-term drive to the support the general population's health and standard of living. China's prior policies that had focused on growth at any cost are now heavily tilted to cleaning up the environment that their population live in. China has been the factory for the world, but they are now tightening regulations on polluting industry, limiting supply.

These forces are inflationary, for commodities at least. The wider debate on inflation continues, with the US FED claiming these pressures will be largely transitory. To some degree they may be but other aspects are more structural. Transitory drivers include the release of pent-up demand as economies reopen, virus related supply chain disruptions across mining and manufacturing and accommodative and coordinated government stimulus spending. Longer-term drivers focus more on environmental and green energy policies, delays in capacity expansion resulting from under-investment during a near decade long commodity bear market and China's motivation to reduce industrial pollution. These long-term factors are powerful and will continue irrespective of economic conditions. It Is also worth acknowledging that too much inflation in the near-term could be negative for commodities given the potential knock-on effects to the general economy, thus measures to dampen short-term pressures such as the recent release of modest quantities of metals from China's Strategic Reserve Bureau are not unwelcome.

The Drive for Electrification

It is important to differentiate the impact of these factors between commodities. We believe they are particularly positive for the likes of copper, which is key for all forms of electrification. Its properties as an electrical conductor, second only to silver which is prohibitively expensive for general use, with limited alternative substitutes point to an attractive demand growth outlook. Given the lengthening lead time to bring on a newly discovered deposit into production, typically upwards of 10 years, together with a decade of underinvestment, copper market conditions are likely to remain tight and metal prices attractive. Those few groups such as First Quantum or Ero Copper, that have been able to commission or restart new long-life operations during the bear market, which provided a more favourable setting to deliver projects on time and budget given limited competition for construction materials and labour, seem particularly well placed to benefit.

Other commodities such as nickel are often cited as a key inputs for EV batteries, but the fundamentals look notably different. Nickel is currently in a small surplus, whilst its primary source of demand is steel which represents a 90% share of consumption.

Fund Positioning

As a beneficiary of many trends and with tight market balance, exposure to copper remains significant for the portfolio. During the last financial year copper prices rose almost 40% and related stocks contributed around half of the positive returns led by the strong performance of First Quantum whose share price rose over 250%. More impressive were gains registered by Foran Metals where progress on its Canadian project, McIlvenna Bay, helped drive a 17-fold increase in the equity from its extremely depressed, Covid-19 lockdown lows. While remaining positive on the outlook for copper the weighting was actively reduced earlier in the year following such strong performance.

While iron ore prices led metal price gains, rising 115% in the year to June 2021, equities of most of the major ore miners showed relatively muted performance with Rio Tinto rising around 30% over the year. We continue to avoid such investments instead preferring proxy beneficiaries such as dry bulk shipper 2020 Bulkers whose share price more than doubled over the period as vessel demand showed huge improvement. Another helpful driver of dry bulk shipping performance has been a result of a surge in coal demand with many countries seeking high quality imported seaborne coal to replace lower grade domestic material. This has particularly been the situation in China which has curtailed its domestic (formerly self-sufficient) coal industry and simultaneously placing an unofficial ban in the importation of Australian product following Australia's request for an international investigation into the source of Covid-19.

Oil demand was the most negatively impacted commodity initially, as commuting and travel collapsed. Led by deeper OPEC+ production cuts, the huge decline in oil output in response to the weak crude prices left the oil market in deficit for over a year allowing surplus inventories to reduce. This is further exacerbated by shareholder pressure on the heavily indebted US shale producers to pay down borrowings rather than expand production into the now very healthy pricing environment. The recovery in demand has more recently enabled OPEC to reverse the 5.8Mbopd production restrictions which are expected to be completed by Q3 2022. Crude prices recovered from very depressed levels helped by the return of OPEC+ production, which is being encouraged by many nations, and prospect of a return of US production. Crude prices rose over 60% in the year, however, rather than invest in exploration & production equities the Fund retained its position in activity related crude shippers in anticipation of improved seaborne trade. While a return to US production is taking longer to materialise, as highly leveraged producers first concentrate on repaying debt, the recovery in OPEC+ output provides an opportunity for increased activity levels to benefit the crude shipping sector.

Shipping is a theme we continue to like with a number of supportive tail winds. Environmental regulation has led to material uncertainty in future propulsion requirements, as a result of which the order book for new vessels is tracking near record lows, suggesting further tight market conditions which will support day rates. This is reflected across names such as Euronav, BWLPG, 2020 Bulkers and Goodbulk. Driven by strong recovery in day rates the outlook for earnings and higher dividends has improved materially.

Implementation of "clean energy" and electrification policies globally remains a key investment theme. However, mindful that government policies that have focused on environmentally friendly growth at any cost may shift to growth at reasonable cost the portfolio has latterly moved to switch in Fund exposure from green economy materials, such a lithium, towards old economy commodities such as oil. Following outstanding performance by Sigma Lithium, whose equity tripled over the last year, the Fund has latterly invested in US drilling capacity which may benefit more from being geared into an improving medium-term outlook for US production growth. Also, we believe risks associated with the distress at Evergrande may be contained by Chinese authorities. As a result, the base metals such as copper may improve following the recent consolidation and as a result the Fund has recently added back to copper equities.

Precious metals remain a useful diversifier

Sentiment for gold shifted lower as the global markets focused on post-Covid-19 recovery trades, but there are notable areas of uncertainty. Covid-19 variants so far have not proven excessively resilient to vaccines, but this could change, whilst government borrowing globally has ballooned in order to fund Covid-19 relief programmes, with no clear plan of how we exit this extended period of easy monetary policy. US tapering and ultimately rate rises are now very clearly flagged by the US federal reserve, so arguably priced in. Whilst the market appears to have the US Feds transitory inflation message, the risks of inflation remain clear given current shortages of housing, commodities, gas/ electricity and labour. Inflation driven by supply shortages is bad inflation, and can hurt the global economy which is constructive for gold, given the negative implications to discretionary spend on the global economy. Precious metals remain well positioned as a hedge against this, as rates are ultimately likely to remain historically low, whilst inflation is increasingly a concern.

Outlook

Some banks have been calling for a new super cycle in commodities. We are more cautious on making such claims, but what we can say for sure is that supply looks constrained given years of underinvestment and a continued focus on ESG matters which continues to hinder commodity supply, which tightens markets and supports pricing.

The key question therefore is the level of demand, but absent another global shock the fundamental balances look encouraging. Increased environmental awareness by governments and consumers looks likely to support demand for cleaner energy and electrification while at the same time constraining supply. Continued capex discipline from the major miners is also holding back capacity expansion as they concentrate on investors returns and grapple with tightening regulations on production. Notwithstanding China's moves to cool some commodity prices which it currently views as excessive, such supply side discipline is positive in extending the commodity cycle and also reducing the risk of overexpansion as global demand growth normalises following the rapid recovery.

The recent spike in energy costs is broadly supportive for commodities as supply from smelters is curtailed, whilst commodity intensive investment in the energy transition remains strong, helped by the upcoming COP 26 meeting. Conscious of the broader economic risks this creates, the fund reduced its weighting to copper miners, after a period of strong performance, reallocating more exposure to energy, with a specific focus on gas. We also note this has led to a notable positive sentiment change toward Nuclear as a source of zero carbon power, from investors and governments, supportive for the uranium mining exposure in the fund.

Energy costs are just one input to the current inflationary pressures we are seeing globally. These inflationary pressures more broadly look likely to persist beyond winter, but to what further extent is less clear. Whilst commodities are a major input to these pressures, they also perform well during inflationary periods, given the ability to pass costs through to consumers.

Against this background we continue to believe the outlook for the Fund is positive.

Ian Francis, Keith Watson, Rob Crayfourd
New City Investment Managers

25 October 2021

Top Ten Largest Holdings

	Valuation 30 June 2020 '000	Purchases £'000	Sales £'000	Appreciation/ (depreciation) £'000	Valuation 30 June 2021 £'000
First Quantum Minerals (note 1) Primarily a copper producer with long life mines in Africa and with a large project recently brought production in Panama. The group also has inventories of gold, nickel and cobalt.	6,302	-	(4,143)	8,388	10,547
Sigma Lithium Resources Sigma Lithium Resources explores and produces lithium for the electric vehicle-bus industry. Sigma Lithium resources serves clients in Canada and Brazil.	1,072	866	-	5,023	6,961
Foran Mining Copper-Zinc developer in Canada, progressing toward a construction decision. The company targets being the first carbon neutral copper miner.	453	-	(1,175)	7,409	6,687
West African Resources The Company has transitioned into a gold producer having brought its Sanbrado discovery in Burkina Faso into production under budget and on schedule.	5,679	960	(942)	585	6,282
Ero Copper A copper producer with mining assets in Brazil.	3,138	1,811	(666)	1,407	5,690
Euronav NV** (note 2) The world's largest independent crude oil tanker company.	3,387	1,392	-	68	4,847
REA Holding** (note 3) The company cultivates oil palms and produces crude oil palm and other palm products. The group's core plantations are located in Indonesia.	3,459	-	-	1,132	4,491
NextGen Energy NexGen Energy is a uranium exploration and development company with a portfolio of projects that span the Athabasca Basin in Saskatchewan, Canada.	1,542	-	-	2,845	4,387
Capstone Mining Corporation Copper miner in the US and Mexico, with a development project in Chile.	639	-	(472)	3,477	3,644
Talon Metals (note 4) A base metals explorer earning into a 51% interest on the high-grade Tamarack Nickel-Copper-Cobalt Project, located in Minnesota in the US, from Rio Tinto. The group has the option to earn a larger 60% interest by 2025.	1,899	204	(2,301)	3,841	3,643
Top ten investments	27,570	5,233	(9,699)	34,175	57,279

Note 1 - Includes First Quantum Minerals valued at £9,797,109 and First Quantum Minerals 7.5% 01/04/2025 ** valued at £750,118.

Note 2 - Includes Euronav valued at £4,246,866 and Euronav Luxembourg SA 7.5% 31/05/2022 ** valued at £600,065.

Note 3 - Includes REA Holdings 9% preference shares valued at £4,039,235, REA Finance 8.75% 31/08/2025 ** valued at £452,500, R.E.A. Holdings valued at £99,000 and value of REA holding updated above.

Note 4 - Includes Talon Metals valued at £3,643,025 and Talon Metals Warrants valued at £nil.

** Denotes a Level 2 security

Comments on largest positions
First Quantum

First Quantum is primarily a copper company with core operations located in Zambia and a large new copper mine, Cobre Panama in Panama. The stock remains a top holding with a leading production growth profile in a sector that should benefit from demand from investment in infrastructure and electrification globally against a backdrop of limited supply growth. With the start-up of the Cobre Panama mine the company's financial flexibility is much improved. We are more comfortable with the debt levels for this company with the Cobre Panama ramp up, but ultimately they have numerous options in even the worst case scenario, such as a non-core asset sales or even a proportional sell down of its core producing mines.

Sigma Lithium Resources

Sigma Lithium Resources is developing a lithium mine in Brazil, with a very high grade product and scope for material expansion. This product will be very suitable for the electric vehicle industry. Sigma Lithium has a strategic alliance with Mitsui, for offtake of its product, adding support through financing of the mine. First production will be in mid 2022, whilst its ESG focus and hydro power source of energy, will provide the best environmental credentials in the industry. It is listed in Canada, but looking to add a further listing on the US Nasdaq exchange.

Foran Mining

Foran mining is a developer of a zinc/copper mine in Canada. Its hydro power source of electricity is key to its target of being the first Carbon neutral copper mine. Copper is also the key electrical metal to enabling the transition to general electrification and reducing global emissions. This is a low capex mine to bring in to production, with significant potential upside to the existing resource, both at depth and across the land package. A shortage of quality copper projects in safe jurisdictions leaves Foran as a potential M&A target.

West African Resources

West African Resources has de-risked significantly since bringing its core mine into production. The group is unhedged and with a low cost of production will allow rapid payback on its project debt. The group recently acquired some neighbouring exploration properties from B2Gold. With 1.1 Moz of resource within trucking distance of the new Sanbrado mine, the acquisition has significant potential to add shareholder value. The group is benefitting from improved liquidity and we believe the group's producer status can deliver further rerating relative to peers.

Ero Copper

This is primarily a copper miner, but also owns a gold mine. The assets are located in Brazil. This is a low capex restart of brown field facilities. The group also has development potential for nickel and platinum group metals ('PGMs'). The metal grades and expansion potential are truly world class. With 30 rigs currently drilling, Ero is one of the most active in the sector.

Euronav NV

Crude oil shipper, with one of the largest fleets of the biggest class of Very Large Crude Carrier ('VLCC') ships. They are a key beneficiary of trade war related disruptions as it forces longer shipping routes and increases day rates. Similarly, if OPEC removes restricted production quotas, or Iran and Venezuela ever see operations improve, this would lead to a further improvement in day rates. Strong cash generation from current day rates should result in a sizeable dividend as evidenced by strong prior payout ratios. Its current valuation is around 0.8x P/NAV, which means it could accretively sell a vessel and buy back stock.

REA Holdings

We believe REA is a leading contributor to responsible palm oil production globally. REA has a commitment to produce sustainably and has also received RSPO certification. Following substantial cost cutting measures the group is well placed to benefit from the recent recovery in the crude palm oil price.

NexGen Energy

NexGen Energy's 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. Given the low production cost and scalable output the Rook I deposit has significant strategic value with potential to influence market pricing, as evident from the recent feasibility study. As a zero carbon source of energy, civil nuclear power generation and hence uranium, may gain further traction in global energy mix.

Capstone Mining Corporation

The low cost copper production from the recently expanded Pinto Valley open pit mine in the United States remains attractively valued. Studies are underway at this mine to allow further increases output and grow the ore reserves providing additional leverage to the value of this producing asset. Continued exploration success offers strong potential for further extension to the life of its underground Mexican mine, Cozamin. The permitted Santo Domingo copper project, located in Chile and which could also produce cobalt by-products, offers considerable growth potential for the group.

Talon Metals

Under the terms of the earn-in agreement Talon is the controlling operator to advance the high grade sulphide project in Minnesota, USA. There is substantial opportunity to expand the resource defined on the existing Tamrak ore body and by identifying deposits on the wider prospective tenements. The Company is seeking to define a reserve and is investigating the production of both nickel and cobalt in concentrates and also producing sulphates for EV batteries for the domestic US market.

Classification of Investment Portfolio by Sector

[Graphs and charts are included in the published Annual Report and Audited Financial Statements which is available on the Company's website at https://ncim.co.uk/city-natural-resources-high-yield-trust/#]

Classification of Investments by Stock Market Quotation

% of total As at 30 June	2021 % of total investments	2020 investments
Canada	49.6	40.4
Australia	21.6	21.5
US	9.8	14.7
UK	8.2	11.9
Europe	7.9	8.5
Unquoted	2.9	3.0
Total Investments	100.0	100.0

Investment Portfolio

as at 30 June 2021

Company	Sector	Valuation £'000	Total Investments %
First Quantum Minerals ** (Note 1)	Copper	10,547	8.2
Sigma Lithium Resources	Lithium	6,961	5.4
Foran Mining	Copper	6,687	5.2
West African Resources	Gold	6,282	4.9
Ero Copper	Copper	5,690	4.4
Euronav ** (Note 2)	Shipping	4,847	3.7
REA Holdings ** (Note 3)	Palm Oil	4,492	3.5
NexGen Energy	Uranium	4,387	3.4
Capstone Mining Corporation	Copper	3,644	2.8
Talon Metals (Note 4)	Nickel	3,643	2.8
Top ten investments		57,279	44.3
BW LPG	Shipping	3,247	2.5
Trevali Mining	Zinc	3,146	2.4
2020 Bulkers	Shipping	3,135	2.4
Lynas Corporation	Rare Earth	3,098	2.4
Metals X	Base Metals	3,026	2.3
Precision Drilling	Oil & Gas	2,704	2.1
Emerald Resources	Gold	2,619	2.0
Roxgold	Gold	2,168	1.7
Odyssey Energy	Oil & Gas	2,113	1.6
Central Asia Metals	Copper	2,111	1.6
Top twenty investments		84,646	65.3
Diversified Gas & Oil	Oil & Gas	2,065	1.6
Arch Resources	Coal	2,032	1.6
Adventus Mining	Copper	2,032	1.6
Raven Russia	Property	1,764	1.4
Integra Resources	Gold	1,715	1.3
Ascendant Resources	Zinc	1,655	1.3
Adriatic Metals	Base Metals	1,635	1.3
Tizir 9.5% 19/07/2022 **	Mineral Sands	1,595	1.2
Hurricane Energy **	Oil & Gas	1,485	1.1
Trafigura Group Pte 6.875% Variable Perpetual **	Finance	1,465	1.1
Top thirty investments		102,089	78.8
Palladium One Mining	Platinum	1,418	1.1
Galena Mining	Base Metals	1,383	1.1
Calibre Mining	Gold	1,280	1.0
Fenix Resources	Iron	1,228	0.9
Base Resources	Mineral Sands	1,208	0.9
Ur-Energy	Uranium	1,204	0.9
Americas Gold and Silver	Silver	1,197	0.9
Goodbulk	Shipping	1,147	0.9
Platinum Group Metals	Platinum	1,130	0.9
Lundin Mining	Copper	1,085	0.9
Top forty investments		114,369	88.3

Notes to the Investment Portfolio are above.

Company	Sector	Valuation £'000	Total Investments %
Calidus	Gold	917	0.7
Westgold Resources	Gold	905	0.7
IGO	Base Metals	843	0.6
Stavely Minerals	Gold	802	0.6
Firefinch	Lithium	795	0.6
Oceanagold	Gold	739	0.6
Fission Uranium	Uranium	715	0.6
Red 5	Gold	696	0.6
Galiano Gold	Gold	644	0.5
Oilflow SPV 1 DAC 12% 13/01/2022 **	Oil & Gas	612	0.5
Top fifty investments		122,037	94.3
Fortuna Silver Mines	Silver	607	0.5
Ora Banda Mining	Gold	581	0.5
Elematic Oyj 10% 30/06/2021 **	Technology	557	0.4
Vintage Energy	Oil & Gas	553	0.4
PetroTal Corp	Oil & Gas	505	0.4
Teck Resources	Diversified Miner	483	0.4
Jupiter Mines	Iron	443	0.3
Aquila Resources	Gold	393	0.3
Bluestone Resources	Gold	387	0.3
Alpha Metallurgical Resources	Coal	370	0.3
Top sixty investments		126,916	98.1
Oklo Resources	Gold	354	0.3
Castile Resources Property	Gold	327	0.2
Peregrine Gold	Gold	296	0.2
Denison Mines	Uranium	273	0.2
Pure Gold Mining	Gold	201	0.2
Sabina Gold & Silver	Gold	199	0.2
Gran Colombia Gold Corp 8.25% 30/04/2024 **	Gold	153	0.1
Silver Lake Resources	Gold	139	0.1
Sherritt International Corp **	Nickel	127	0.1
NT Rig Holdco PTE 7.5% 20/12/2021 **	Finance	105	0.1
Top seventy investments		129,090	99.8
Other investments		263	0.2
Total investments		129,353	100.0

Notes to the Investment Portfolio are above.

Strategic Review

Introduction

The Company operates under the guidelines for UK-listed Companies' Annual Reports in accordance with The Companies Act 2006, and is designed to provide information primarily about the Company's business and results for the year ended 30 June 2021. It should be read in conjunction with the above 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.

This year, we also discuss our approach to our stakeholder responsibilities and the Board's review of the Company's purpose, culture and values during the year for the first time, and in more detail, below. We also discuss our approach to people, social and governance matters and the environment in the Directors' Report below.

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 up to 25 per cent of shareholders' funds (measured at the time of drawdown).

The Investment Manager expects that the Company will normally be fully invested. However, during periods in which changes in economic circumstances, market conditions or other factors so warrant, the Company may reduce its exposure to securities and increase its position in cash, money market instruments and derivative instruments in order to seek protection from stock market falls.

The Company's performance in meeting its objectives is measured against key performance indicators ('KPIs') as set out below. The primary KPI against which shareholders' returns are measured is a composite benchmark weighted 80 per cent to the EMIX Global Mining Index (sterling adjusted) and twenty per cent to the Credit Suisse High Yield Index (sterling adjusted).

Principal Risks and Uncertainties and Risk Mitigation

Risks are inherent in the investment process, but it is important that their nature and magnitude are understood so that risks, particularly those which the Company does not wish to take, can be identified and either avoided or controlled. The Board has established a detailed framework of the key risks that the business is exposed to, with associated policies and processes devised to mitigate or manage those risks.

The Directors confirm that they have carried out a robust assessment of the emerging and principal risks facing the Company including those that would threaten its business model, future performance, solvency or liquidity. The Board has spent considerable time analysing the global effects of the Covid-19 pandemic this year, which had resulted in a new principal risk this year, and is closely monitoring the continued impact of Brexit as part of the Company's investment risk. The Board and Investment Manager will both continue to keep developments under review.

Covid-19 Risk - The Covid-19 pandemic has had a profound effect globally and at the time of writing there continues to be considerable uncertainty as to when and if the situation might be resolved. The natural resource sectors of economies that the Company focuses on under its investment strategy have been materially impacted by events, having encountered reduced demand; production and supply restrictions; and increased governmental intervention and regulation at different times. The interconnectedness of the global economy in the twenty first century means there is a continuing risk of future events or disruption. The Board have therefore introduced a new principal risk as at the date of this report to reflect the events of 2021 year to date, and the possibility of future risks to the Company's investment strategy and income streams.

Investment and Strategy Risk - The Board is responsible for deciding the investment strategy to fulfil the Company's objectives and monitoring the performance of the Investment Manager. Inappropriate strategy, including country and sector allocation, stock selection and the use of gearing, could lead to poor returns for shareholders. To manage this risk the Board requires the Investment Manager to provide an explanation of significant stock selection decisions and the rationale for the composition of the investment portfolio at each Board meeting, when gearing levels are also reviewed. The Board monitors the spread of investments to ensure that it is adequate to minimise the risk associated with particular countries or factors specific to particular sectors. The Investment Manager also provides the Board and shareholders with monthly factsheets which include an investment commentary.

Market Risk - The Company's assets consist principally of listed equities and fixed interest securities and its greatest risks are in consequence market-related. In addition to ordinary movements in the prices of the Company's investments and the loss that the Company might suffer through holding investments in the face of negative market movements, the Company's investment strategy necessarily amplifies this risk (see Sector Risk below). The Board seeks to mitigate this risk through the processes described in the paragraph above, monitoring the implementation and results of the investment process with the Investment Manager.

Sector Risk - The largest part of the Company's assets consist of equity-related investments in companies, usually mid and small cap companies, with a wide range of commodity exposures. The prices of the underlying commodities are often volatile and the companies can be located in countries at risk of political instability. The liquidity in the shares of the investee companies is often restricted, meaning that it can be difficult to buy or sell volumes of shares at the quoted price. The Board seeks to mitigate this risk through the processes described in the paragraph above on Investment and Strategy Risk. In addition, the closed-ended structure of the Company is an essential part of the Board's management of this risk, ensuring that parts of the portfolio do not have to be sold to raise liquidity to fund redemptions at short notice.

Financial Risk - The Company's investment activities expose it to a variety of financial risks that include market price risk, foreign currency risk, interest rate risk and liquidity and credit risk. Further details of these risks and the ways in which they are managed are disclosed in note 16 of the financial statements.

Earnings and Dividend Risk - Earnings do not underpin dividends declared on an annualised basis, with the portfolio being managed on a total return basis. This may mean that in future years annualised earnings from investments may generate insufficient income to cover dividends declared. In that event, the Directors would consider declaring dividends from retained earnings, with the risk that shareholders' capital invested then reduces over time. Future dividends are expected to be uncovered over the short to medium term and will be funded from distributable reserves as necessary.

Operational Risk - The Company relies upon the services provided by third parties and is reliant on the control systems of the Investment Manager and the Company's other service providers. The security and/or maintenance of, inter alia, the Company's assets, dealing and settlement procedures, and accounting records depend on the effective operation of these systems. These are regularly tested and monitored and are reported on at each Board meeting. An internal control report, which includes an assessment of risks, together with the procedures to mitigate such risks, is prepared by BNP Paribas Securities Services, whose systems and processes the Administrator relies upon. These are reviewed by the Audit Committee once a year. CQS delivers a risk based internal audit plan across the CQS Group which covers different areas of front, middle and infrastructure audits; any areas of concern are discussed with the Audit Committee when it meets.

Cyber Risk - Cyber Risk has previously been monitored as an element of operational risk but given the heightened risk to information security as cyber criminals become more sophisticated, and exacerbated by the increased reliance on electronic communication and storage of data, the Board now consider cyber risk and data security as a principal risk in its own right. Due to the structure of the Company's business model, all cyber risks rests with the service providers, the service providers are highly regulated entities, nevertheless we have increased our monitoring and request annual confirmations that cyber risk is appropriately controlled, and no significant incidents impacting the Company have occurred.

Regulatory Risk - The breach of regulatory rules could lead to a suspension of the Company's stock exchange listing or financial penalties. Breach of Sections 1158 to 1159 of the Corporation Tax Act 2010 could lead to the Company being subject to tax on chargeable gains. The Company Secretary monitors the Company's compliance with the Listing Rules of the UK Listing Authority and Sections 1158 to 1159 of the Corporation Tax Act 2010. Compliance with the principal rules is reviewed by the Directors at each Board meeting.

Political Risk - Political developments are closely monitored and considered by the Board. The Board noted the continued uncertainty following the UK leaving the European Union. The Board continues to receive regular briefings regarding the increased tension around established global and regional trade arrangements and threat of sanctions. The Board will continue to monitor developments as they occur and assess the potential consequences for the Company's future activities.

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. Areas discussed include longer term impacts of climate change on the Company's portfolio and returns, and any prolonged economic impact of Covid-19 on different sectors of the world economy. The Board discussed these with the Manager, and developments in both areas will be kept under review, along with the impact of Brexit.

Viability Statement

In accordance with the provisions of the AIC Code, the Directors have assessed the viability of the Company over a period longer than the 12 months required by the 'Going Concern' provision. The Board conducted this viability review for a period of three years, such 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 taking into account the impact of uncertainties in the markets.

As discussed throughout the Strategic Review and this Annual Report as a whole, the Directors continue to monitor the implications of the Covid pandemic on the Company's investment strategy, outlook and financial position. This monitoring has considerably informed the Directors' viability assessment and statement this year

However, the Directors do not expect there to be any significant change to the current principal risks facing the Company, which now include a new Macro-Event Risk relating to the effects of the Covid pandemic, nor to the adequacy of the controls in place to mitigate those risks. Furthermore, the Directors do not envisage any change in strategy which would prevent the Company from operating over the three year period.

This is based on 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 Board also considers the annual continuation vote should not be a factor to affect the three year period given the ongoing support of major shareholders.

In making this statement the Board: (i) considered the continuation vote to be proposed at the Annual General Meeting which the Board considers will be voted in favour of by shareholders; and (ii) carried out a robust assessment of the principal risks facing the Company. These risks and their mitigations are set out above. The principal risks identified as most relevant to the assessment of the viability of the Company were those relating to a future macro-event likely to have a material impact on the financial position of the Company and the potential under-performance of the portfolio and its effect on the ability to pay dividends. When assessing these risks the Directors have considered the risks and uncertainties facing the Company in severe but reasonable scenarios, taking into account the controls in place and mitigating actions that could be taken.

When considering the risk of under-performance, the Board carried out 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 re-pay and re-negotiate borrowings, potential breaches of loan covenants and the maintenance of dividend payments.

The Board considered the Company's portfolio and concluded 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 Board also considered the impact of potential regulatory change and the controls in place surrounding significant third party providers, including the fund 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 83.4%.

The Scotiabank loan had expired on the 17 September 2021 but new terms have been agreed for a further two years until 17 September 2023.

Based on the Company's processes for monitoring revenue and costs, with the use of frequent revenue forecasts, and the 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 for a period of three years from the date of approval of this Report.

Performance Measurement and Key Performance Indicators

The Board uses a number of performance measures to assess the Company's success in meeting its objectives. The tables and data above show how the Company has performed against those KPIs, and a glossary of terms and alternative performance measures is included below. The key performance indicators (KPIs) used to measure progress and performance over time, and which are comparable to those reported by other investment trusts are as follows:

Investment Performance

To assess investment performance, the Board monitors the net asset value (NAV) performance of the ordinary shares relative to that of its benchmark index. 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. After investigation the Board has concluded that there are no indices truly representative of the Company's diversified small and mid-cap commodities equity focus or its high-yielding securities portfolio. It has therefore chosen an approximate composite proxy, being 80 per cent of the EMIX Global Mining Index (sterling adjusted) and twenty per cent of the Credit Suisse High Yield Index (sterling adjusted). Given that only a very small proportion of the Company's portfolio overlaps with the composite benchmark, Shareholders should expect a significant degree of convergence away from the benchmark return.

The performance of the NAV and composite benchmark are shown in the [graphs included in the published Annual Report and Audited Financial Statements which is available on the Company's website at https://ncim.co.uk/city-natural-resources-high-yield-trust/#].

NAV and Share Price Performance

Dividends per share

The Board currently intends to at least maintain the level of dividend paid by the Company in respect of subsequent financial years. The continuing ability of the Company to do so is monitored on a quarterly basis. During the year under review dividends per share totalling 5.60 pence per share were declared (2020: 5.60 pence).

Ongoing charges

The ongoing charges are 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 Company expenses. For the year under review ongoing charges were 1.8% (2020: 1.8%).

These KPIs fall within the definition of "Alternative Performance Measures" (APMs) under guidance issued by the European Securities and Markets Authority (ESMA) and additional information explaining how these are calculated is set out in the Glossary below.

The Directors have carefully selected these KPIs as in their view these combine to provide the most appropriate measures of performance, both in terms of managing the business and presentation to shareholders and stakeholders. The Board is satisfied that performance against each measure has been satisfactory in the context of the events in the financial year. Further information regarding forward looking assessments for the KPIs can be found in the Chairman's Review and Investment Manager's Review.

Future Prospects

The above Chairman's Statement and 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.

Social, Community, Employee Responsibilities and Environmental Policy

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, has in turn stated that they view environmental, social and governance ("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 signatory to the internationally recognised Principles for Responsible Investment ("PRI"), fully supporting all of the PRIs.

As an investment trust with its current structure the Company has no direct social, community, employee or environmental responsibilities of its own.

Modern Slavery Act 2015

As an investment vehicle the Company does not provide goods or services in the normal course of business and does not have customers. Accordingly, the Directors consider that the Company does not fall within the scope of the Modern Slavery Act 2015 and is not, therefore, obliged to make a slavery and human trafficking statement.

Board Diversity

Details of the Directors of the Company on 30 June 2021, all of whom held office throughout the year are set out below.

The Board consists of three male Directors and two female Directors, which represents a gender diversity ratio of 40% and means composition of the Board already exceeds the expectations of Lord Davies's 'Women on Boards' review.

The Board acknowledges that diversity in the Boardroom and the workplace is also an increasingly important area of focus today for UK business, and also a key theme of the latest update of the Code. Whilst the current composition of the Board, which is stable, is very diverse in terms of experience and background, it is not ethnically diverse. The Board is committed to keeping this under review when considering future board appointments, whilst always basing any recruitment on merit. The Company has no directly employed staff, however, the Board is kept informed of and monitors diversity based policies at each of its principal third party advisors.

By order of the Board

Richard Prickett

Chairman

25 October 2021

Stakeholder Interests (s. 172 statement)

Stakeholder

Activity or mitigation in year

Shareholders

·the Board operates an investment strategy designed to deliver outperformance over the medium to longer term, based on exposure to valuable commodity markets;

•shareholders' rights are protected under the Company's Articles of Association which require any proposal that may materially change those rights to be subject to prior approval by a majority of shareholders in general meeting; and

·shareholders are given opportunities to attend meetings with the Board and to also attend, ask questions and vote at the Annual General Meeting of the Company.

Suppliers

The Board regularly evaluates the performance of its key panel of third party professional service providers.

Community & Environment

The Board's appointed investment manager is committed to integrating environmental, social and governance themes into both its research and engagement activities. CQS is also a signatory to the Principles for Responsible Investment. These areas are further discussed on page 18.

Other

Stakeholders

·the Board seeks to maintain the highest levels of corporate governance through compliance with the principles and provisions of both the AIC Code and, to the maximum extent practicable, the UK Code; and

·the Board is committed to responding promptly and transparently to any reputational or regulatory matter that might arise affecting the Company, its future prospects or its investment activities.

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;

(b)the need to foster the company's business relationships with suppliers, customers and others;

(c)the impact of the company's operations on the community and the environment;

(d)the desirability of the company maintaining a reputation for high standards of business conduct; and

(e) the need to act fairly between members of the Company.

As a listed investment trust, the Directors consider the following as supporting its approach to those key areas of these statutory responsibilities:

Principal decisions

The principal decisions set out below outline decisions taken during the year which the Board considers have the greatest impact on the Company's long term success. 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.

Decision

Shareholder interests

Review of dividend policy

The Board recognises the importance Shareholders place on the Company's dividend policy and is cognisant of the need to ensure the viability of the dividend. It was agreed it was in the best interests of the Company and Shareholders to maintain the dividend in the year under review.

Change of service provider

On 15 September 2020, BNP Paribas were appointed as Company Secretary, Administrator, Depositary, and Custodian to the Company, The Board have monitored the progress and are pleased with the current service levels.

Relations with Shareholders

The Directors place a great deal of importance on communication with shareholders. The Annual Report and Financial Statements are 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 letters 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" below. The Notice of the Annual General Meeting ('AGM') included within the Annual Report and Accounts is sent out at least 20 working days in advance of the meeting. 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 or subsequent to the meeting when teas and coffees will be offered to shareholders if the meeting is not closed due to pandemic restrictions. The Company Secretary is available to answer general shareholder queries at any time throughout the year.

Purpose, Values and Culture

The Board and the Investment Manager have taken time during the year to consider the expectations of the Code in the new areas of corporate purpose, values and culture. Whilst of the opinion that the Code's requirements in these areas apply more stringently to premium listed companies with their own operations, rather than investment companies with limited operations, the Board have 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 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 to create an environment conducive to effect 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.

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 that the investment strategy focuses on, 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.

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 below because it is information which refers to events that have taken place during the course of the year.

By order of the Board

Richard Prickett

Chairman

25 October 2021

Environmental, Social and Governance ("ESG") Statement

Introduction

CQS Natural Resources Growth and Income plc ("the Company") is a UK listed investment company whose objective is to provide shareholders with capital growth and income from a portfolio of mining and resource equities and mining, resource, industrial and other fixed interest securities. The Company has appointed CQS (UK) LLP ("CQS") as its investment manager. The Board of Directors confirms that the Company places the highest regard to ESG factors in the investment decision making process and this focus plays a key role in the execution of its investment strategy. The Board recognises the importance to society and Shareholders the need to invest in companies that are environmentally and socially responsible with clear governance structures. The Board believes the integration of ESG factors in the investment process provides enhanced financial returns for Shareholders through deeper, more informed investment decisions. The Board has reviewed and agreed the ESG approach adopted by CQS and a summary of this is set out below.

CQS ESG Statement

CQS is committed to operating in a socially responsible manner, embedding strong and clear governance, and conducting our business in a sustainable way. In our role as an investment manager we view ESG factors as key drivers influencing financing costs, valuations and performance, while also acting as a lever to shape and influence the world for generations to come.

The assessment and integration of ESG factors is a crucial part of this commitment across the CQS investment platform, both in public and privately held companies, and a key factor in our decision-making. By embedding ESG into our investment process we enhance our ability to identify value, investment opportunities and, critically, to generate the best possible returns for our clients.

Our ESG process specifically looks at ESG factors through integration in our sector research process, including modelling and internal ratings with ESG methodologies applied to both public and private debt. Methodologies include analysing the relative importance and risk posed by any identified ESG issue. Research notes are stored in accessible form and available for use across the Front Office. Discussion and debate is encouraged during the ESG internal analysis, both within the CQS Research team and with Portfolio Managers.

This is followed by an evaluation. Portfolio Managers are required to consider (to an appropriate degree having regard to their investment strategy) ESG risks as part of their investment decision making. This includes, but is not limited to

Environmental: Climate Change, Water Stress, Biodiversity and Land Use, Toxic Emissions and Waste and Environment Opportunities

Social: Labour management, Health and Safety, Privacy and Data Security, Stakeholder Opposition and Social Opportunities, Mobility and Diversity

Governance: Corporate Governance and Corporate Behaviour including Ethics, Corruption, Instability, Diversity and Remuneration.

CQS Five-Stage ESG Investment Process

Environmental, Social and Governance (ESG) Policy applies to all strategies across the CQS platform

Standards and Codes

CQS is a signatory and/or supporter to the following:

United Nations: Principles for Responsible Investment ("UN PRI")

Task Force on Climate-Related Financial Disclosures ("TCFD")

CDP ("CDP", formerly Carbon Disclosure Project)

Standards Board for Alternative Investments ("SBAI", formerly HFSB)

·Climate Action 100+

In addition:

·CQS has become a signatory to the UK stewardship code

Specific Statement from the CQS Investment Managers with regard to the Company

Natural resources companies are exposed to ESG risk given the nature of their business. Companies that demonstrate social value creation and good governance - through responsible and active ESG management - go some way in mitigating that risk. Moreover, they are more likely to attract capital which will differentiate them from their peers on a relative valuation basis, a trend that we expect to continue today and over the long term.

It is our responsibility to effectively analyse and monitor investee companies' financial and non¬financial (ESG) performance. ESG disclosure is an important consideration when analysing investment opportunities and we are committed to evolving our approach in support of our ESG principles. We follow the CQS firm-wide five-stage ESG investment integration process but are also guided by the following principals which have by agreed with the Board of the Company.

•to engage directly in dialogue with companies to understand their ESG approach, their ambition and disclosure, and to table questions or concerns;

•to specifically question Human Rights including Indigenous Peoples;

•to use internal and third party data and ratings providers;

•to vote at shareholder meetings; and

•only as a last resort, exclude companies from our investment universe.

At the time of writing 23% of the Company's portfolio is covered by MSCI for their ESG rating service. MSCI have a minimum 65% threshold before we are able to provide a meaningful MSCI ESG rating for the portfolio. We monitor this closely and engage to try and increase the percentage of the portfolio covered.

Board of Directors and Investment Manager

All of the Directors are non-executive and all are considered by the Board to be independent of the Investment Manager. The Board fulfils the function of the Audit, Nomination and Management Engagement Committees.

Richard Öther Prickett FCA

Chairman

Length of service: 14 years

appointed a Director on 30 November 2006 and resigned as Chairman of the Audit Committee on 1 October 2016. Appointed Chairman on 24 March 2018.

Experience:

Richard is a Chartered Accountant and has substantial corporate experience in the mineral sector, having been chairman of Brancote Holdings until its merger with Meridian Gold in 2002. He is also a non-executive director of AIM listed The City Pub Group plc, and The Pioneer (City) Pub Company Limited.

Committee membership:

Management Engagement Committee

Nomination Committee

Remuneration: 33,000 per annum (increased from £30,000 on 1 January 2021)

All other public company directorships:
The City Pub Group plc

Shared Directorships with any other Trust Directors: None

Shareholding in Company: 105,000 ordinary shares

Alun Grant Evans

Director

Length of service: 7 years

appointed a Director on 26 September 2014.

Experience:

Alun has worked in the investment management industry for nearly 40 years. He began his career at Capel-Cure Myers moving to Carr Sheppards Crosthwaite in 1990, where he became an executive director in 1998. He joined Cheviot in 2009 as Business Development Director, from which he retired in August 2017.

Committee membership:

Audit Committee

Management Engagement Committee

Nomination Committee

Remuneration: 25,000 per annum (increased from £23,000 on 1 January 2021)

All other public company directorships: None

Shared Directorships with any other Trust Directors: None

Shareholding in Company: 10,540 ordinary shares

Carole Cable

Director

Length of service: 3 years

appointed a Director on 1 October 2017.

Experience:

Carole is a partner and co-head of the Energy and Resources division at Brunswick Group LLP, where she advises clients in the mining and oil/gas sector. Carole has had a 25 year career connected to the mining and commodities sector, initially on the sell side at JP Morgan and Credit Suisse. Carole is also a non-executive director of Nyrstar NV, the global mining and multi metals business, and the Chair of Women in Mining UK.

Committee membership:

Audit Committee

Management Engagement Committee

Nomination Committee

Remuneration: 25,000 per annum (increased from £23,000 on 1 January 2021)

All other public company directorships:
Nyrstar N.V.

Shared Directorships with any other Trust Directors: None

Shareholding in Company: None

Christopher Michael Casey

Director

Length of service: 4 years

appointed a Director on 1 October 2017.

Experience:

Christopher is currently Chairman of TR European Growth Trust PLC, and a director of Black Rock North American Income Trust PLC, Mobius Investment Trust plc, and Life Settlement Assets PLC. Christopher was a KPMG partner until 2010. Since then he has carried out a number of non-executive board roles including chairman of China Polymetallic Mining Ltd.

Committee membership:

Audit Committee

Management Engagement Committee

Nomination Committee

Remuneration: 25,000 per annum (increased from £23,000 on 1 January 2021)

All other public company directorships:

TR European Growth Trust Plc

BlackRock North American Income Trust Plc

Mobius Investment Trust plc

Life Settlement Assets PLC

Shared Directorships with any other Trust Directors: None

Shareholding in Company: 6,500 ordinary shares

Helen Foster Green

Director and Chairman of the Audit Committee

Length of service: 6 years

appointed a Director on 1 September 2015 and appointed

Chairman of the Audit Committee on 1 October 2016.

Experience:

Helen is a Chartered Accountant and a director of Saffery Champness, one of the UK's Top 20 accountancy practices, in Guernsey. She joined Saffery Champness in London in 1984, relocating to Guernsey in 2000.

Committee membership:

Audit Committee

Management Engagement Committee

Nomination Committee

Remuneration: 28,500 per annum (increased from £26,000 on 1 January 2021)

All other public company directorships:

Aberdeen Emerging Markets Investment Company Limited

UK Mortgages Limited

JPMorgan Global Core Real Assets Limited (appointed 24

September 2019)

Acorn Income Fund Limited (resigned 16 August 2019)

Shared Directorships with any other Trust Directors: None

Shareholding in Company: 5,500 ordinary shares

Investment Manager

CQS Cayman Limited Partnership ("CQS") was appointed as the Company's Investment Manager in 2007 and with the agreement of the Board, since then the function has been delegated to CQS (UK) LLP, trading as NCIM.

NCIM, is part of the CQS Group, a global diversified asset manager, running multiple strategies with, as at 31 August 2020, assets of US$17.7 billion under management.

With effect from 19 May 2019, the Company entered into a new investment management agreement to appoint CQS (UK) LLP as its Investment Manager. The previous investment management agreement with CQS was terminated

Ian Francis, Keith Watson and Rob Crayfourd have day-to-day responsibility for managing the Company's portfolio.

Ian Francis joined the NCIM team in 2007. He has over 40 years' investment experience, primarily in the fixed interest and convertible spheres, and his career has included Collins Stewart, West LB Panmure, James Capel and Hoare Govett.

Keith Watson joined the NCIM team in 2013 from Mirabaud Securities where he was a Senior Natural Resource Analyst. Prior to Mirabaud, Keith was Director of Mining Research at Evolution Securities. Previous to this, he was a top-ranked business services analyst at Dresdner Kleinwort Wasserstein, Commerzbank and Credit Suisse/BZW. Keith began his career in 1992 as a portfolio manager and research analyst at Scottish Amicable Investment Managers. Keith has a BSc (Hons) in Applied Physics from Durham University.

Robert Crayfourd joined the NCIM team in 2011. He holds a BSc in Geological Sciences from the University of Leeds and is a CFA holder with over 13 years' experience, having previously worked for the Universities Super Annuation Scheme and HSBC Global Asset Management where he focused on the resource sector.

Alternative Investment Fund Managers Directive (AIFMD)

The Company has appointed CQS (UK) LLP, a subsidiary of CQS, as the Company's alternative investment fund manager ("AIFM"). The AIFM has received its approval from the FCA to act as AIFM of the Company, the Company is therefore is therefore fully compliant. An additional requirement of the AIFMD is for the Company to appoint a depositary, which will oversee the custody and cash arrangements and other AIFMD required depositary responsibilities. The Board appointed BNP Paribas on 15 September 2020 to act as the Company's depositary.

As part of the process the investment management agreement was updated and builds in the regulatory requirements arising as a result of the appointment of the AIFM.

Further AIFMD disclosures are shown below.

Directors' Report

The Directors present their Annual Report and the audited financial statements for the year ended 30 June 2021. The financial statements have been prepared in accordance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, and the relevant provisions of the Companies Act, 2006.

Corporate Governance

The Statement of Corporate Governance is set out below and forms part of this Report.

Principal Activity and Status

The Company is registered as a public limited company in terms of the Companies Act 2006 (number: 02978531). It is an investment company as defined by Section 833 of the Companies Act 2006. It carries on the business of an investment trust and has been approved under Sections 1158 and 1159 of the Corporation Tax Act 2010 by HM Revenue and Customs as such, subject to continuing to meet eligibility requirements. The Directors are of the opinion that the Company has conducted its affairs in a manner compliant with the conditions for continued approval and intends to continue to do so.

The Company has a premium listing on the London Stock Exchange, within the Financial Services sector, and is identified by the TIDM or ticker symbol 'CYN'. The Company's ISIN is GB0000353929 and SEDOL is 0035392.

As an investment company that is managed and marketed in the United Kingdom, the Company is an Alternative Investment Fund ("AIF") falling within the scope of, and subject to, the requirements of the Alternative Investment Fund Managers Directive ("AIFMD"). Further details are provided in the AIFMD Disclosures below.

The Company's shares are eligible for inclusion in a New Individual Savings Account (NISA). The Company is a member of the Association of Investment Companies ('AIC').

Results and Dividends

Details of the Company's results and dividends paid are shown above.

Dividend Policy

Subject to market conditions and the Company's performance, financial position and financial outlook, it is the Directors' intention to pay an attractive level of dividend income to Shareholders on a quarterly basis.

The Company intends to continue to pay all dividends as interim dividends. A resolution to approve this dividend policy will be proposed at the Annual General Meeting ('AGM').

Directors

Biographical details of the Directors, all of whom are non-executive, can be found above.

As explained in more detail under Corporate Governance below, the Board has agreed that all Directors will retire annually. Mr R O Prickett, Ms C Cable, Mr C M Casey, Mr A G Evans, and Mrs H F Green will retire at the Annual General Meeting and, being eligible, offer themselves for re-election for a further year.

The Directors believe that each of the Directors brings a significant range of business, financial and management skills and experience to the Company and enable the Board to provide effective strategic leadership and proper guidance of the Company. The Board confirms that, following the annual evaluation process set out in the Corporate Governance Statement below, the performance of each of these Directors continues to be effective and demonstrates commitment to the role. The Board therefore believes that it is in the interests of shareholders that these Directors are re-elected.

None of the Directors is entitled to compensation for loss of office on the takeover of the Company. None of the Directors has a service contract with the Company.

The Directors exercise the powers conferred by the Company's Articles of Association and UK Company Law to manage the Company's interest for the benefit of shareholders and stakeholders. Further information regarding the proposed changes to those authorities this year can be found below.

Directors and Officers Insurance

The Company has a Directors and Officers insurance policy in respect of liabilities that may attach to them in their capacity as Directors of the Company. This covers any liabilities that may arise to a third party for negligence, default or breach of trust or duty. This policy has been in force throughout the year under review and remains in place as at the date of this report. For more information see note 4.

Conflicts of Interest

The Board has a procedure for identifying, reporting and addressing conflicts of interest, or potential conflicts. It considers that the procedure has worked effectively during the year under review and intends to continue to review all notified situations on an annual basis.

Directors' Remuneration Policy and Report

The Directors' Remuneration Report is set out below. An advisory ordinary resolution to approve the report will be put to shareholders at the Company's AGM. The Company is also required to put the Directors' Remuneration Policy to a binding shareholder vote on a triennial basis. The Remuneration Policy was approved by shareholders at the AGM held in 2018 and will continue to apply for the next financial year to 30 June 2021.

Directors' responsibilities

The Directors' responsibilities in preparing these financial statements are stated below.

Capital Structure

As at 30 June 2021 there were 66,888,509 ordinary shares of 25 pence each in issue. The ordinary shares give shareholders the entitlement to all of the capital growth in the Company's net assets and to all the Company's income that is resolved to be distributed.

Substantial Interests in the Company's Shares

In accordance with the FCA's Disclosure and Transparency Rule 5.1.2R as at 30 June 2021, the Company had received the following.

notifications of interests in 3% or more of the voting rights attached to the Company's issued share capital. The Company has not been advised of any changes to these notified interests between 30 June 2021 and the date of this report.

Substantial Interests

Ordinary shares	Number held	% held
Hargreaves Lansdown Asset Mgt(Bristol)	15,287,120	22.85
Interactive Investor (Glasgow)	11,395,997	17.04
A J Bell Securities (Tunbridge Wells)	6,148,149	9.19
Charles Stanley (London)	5,431,865	8.12
Armstrong Investments (UK)	4,600,000	6.88
Barclays Wealth (London)	3,387,675	5.06
Halifax Share Dealing (Halifax)	2,595,928	3.88
Philip J Milton & Co	2,449,896	3.66

Management and Management Fees

As part of its strategy for achieving its objectives, the Board has delegated the management of the investment portfolio to CQS (UK) LLP, trading as New City Investment Managers (NCIM), with Ian Francis, Keith Watson and Rob Crayfourd as the portfolio managers.

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.

Since 3 April 2018 the Company's annual management fee has been 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.

The administration of the Company has been delegated to BNP Paribas Securities Services (BNP). Equiniti act as the Company's share registrar.

Change of Control

There are no agreements which the Company is party to that might be affected by a change of control of the Company.

Exercise of Voting Powers

The Investment Manager, in the absence of explicit instruction from the Board, is empowered to exercise discretion in the use of the Company's voting rights in respect of investee companies. The underlying aim of exercising such voting rights is to protect the return from an investment.

Principal risks

The key risks faced by the Company are set out in the Strategic Review above. The Board and Audit Committee regularly review the Company's emerging and principal risks and consider related changes in the Company's risk profile.

Going Concern

Since 2004, shareholders have been given the opportunity to vote on an Ordinary Resolution to continue the Company as an investment trust at each Annual General Meeting of the Company.

Such a resolution has been proposed as Resolution 11 within the notice of Annual General Meeting below. The Directors recommend that shareholders vote in favour of continuation, as they intend to do so in respect of their own beneficial shareholdings. Discussions with the Company's significant shareholders also suggest their support for the continuation vote, as in previous years. If the resolution is not passed, the Board will put forward proposals to liquidate, open-end or otherwise reconstruct the Company.

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. 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, notwithstanding that the Company is subject to an annual continuation vote as described above.

In forming this opinion, the Directors spent considerable time during the financial year, together with the Investment Manager, reviewing the implications of the Covid-19 pandemic for the Company's financial position, liquidity, investment strategy and dividend policy. The Investment Manager also kept the Board regularly updated as to the implications for the portfolio investee companies where these had been disclosed.

These regular reviews established that the global pandemic had profound implications for the Company's portfolio of investee companies, many of which reduced or restricted production for safety reasons or due to the availability of staff. This had the immediate effect of reducing the Company's dividend income streams in the short term. However, the Company was otherwise well placed to withstand the wider economic effects of the pandemic, particular with the recovery in asset values in the second quarter. The Board were therefore comfortable to declare the fourth quarterly interim dividend payment, to be drawn from the Company's strong reserves, and also firmly feel it is appropriate to adopt the going concern basis as at 30 June 2021.

The Company has renewed its unsecured loan facility with Scotiabank Europe Plc ("Scotiabank") for a further two years following its expiry on the 17 September 2021.

Financial Statements

The Directors' responsibilities regarding the financial statements and safeguarding of assets are set out below.

Streamlined Energy and Carbon Reporting

The Company is categorised as a lower energy user under the HMRC Environmental Reporting Guidelines March 2019 and is therefore not required to make the detailed disclosures of energy and carbon information set out within the guidelines. The Company's energy and carbon information is therefore not disclosed in this report.

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from its operations for the year ended 30 June 2021 (as per the prior year), nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013 (including those within the underlying investment portfolio). The Company's approach with regard to the environmental standards and performance of investee companies is discussed in more detail in the section headed Stewardship Code below.

Listing Rule 9.8.4

Listing Rule 9.8.4 requires the Company to include certain information in a single identifiable section of the Annual Report or a cross-reference table indicating where the information is set out. The Directors confirm that there were no disclosures to be made in this regard.

Annual General Meeting

The Notice of the Annual General Meeting is contained below.

Continuation Vote

The Directors are required to propose an Ordinary Resolution at the forthcoming Annual General Meeting that the Company shall continue in being an investment trust. Accordingly, the Directors are proposing Resolution 11, as an Ordinary Resolution.

Resolutions relating to the following items of special business will also be proposed at the forthcoming AGM.

Directors' Authority to Allot Shares

The Directors are seeking authority to allot shares. Resolution 12 will, if passed, authorise the Directors to allot new shares up to an aggregate nominal amount of £1,672,000 per annum being 10 per cent of the total issued shares as at the date of the Notice of the Annual General Meeting.

In response to the shareholder vote at the 2020 AGM, the Board clarifies and reconfirms that it would not, under any ordinary circumstance, seek to issue shares at a discount to net asset value per share. In the unlikely circumstance that the Directors consider such an action to be in the interests of shareholders, it would seek a specific enabling, or ratifying, authority to do so from shareholders.

Authority to disapply pre-exemption rights

Resolution 13, which is a Special Resolution, will, if passed, renew the Directors' existing authority to make allotments of shares or sell shares from treasury for cash without first offering them to existing holders in proportion to their existing holdings.

Resolution 13 authorises the Directors to allot new ordinary shares for cash or to sell shares held by the Company in treasury, otherwise than to existing shareholders on a pro rata basis up to an aggregate nominal amount of £836,100 which is equivalent to 3,344,405 ordinary shares and represents 5% of the Company's ordinary share capital as at the date of the Notice of Annual General Meeting.

These authorities will continue in effect until the conclusion of the Annual General Meeting in 2021. The Directors do not have any immediate plans to issue further ordinary shares in the Company.

Directors' Authority to Buy Back Shares

The Company did not purchase any shares for cancellation during the year.

Resolution 14, as set out in the notice of the Annual General Meeting, seeks renewal of the Company's authority to purchase its own shares. The renewed authority to make market purchases will be in respect of 10,026,525 ordinary shares being approximately 14.99 per cent of the issued ordinary shares of the Company in issue as at the date of the Annual General Meeting.

The price paid for the shares will not be less than the nominal value of 25p per share nor more than the higher of (i) 105 per cent of the average middle market quotations taken from and calculated by reference to the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the Ordinary Share is contracted to be purchased or (ii) the price of the last independent trade or (iii) the highest current independent bid. This power will only be exercised if, in the opinion of the Directors, a purchase would result in an increase in net asset value per share and be in the interests of the shareholders as a whole. Any shares purchased under this authority will be cancelled immediately on completion of the purchase or held in treasury. The Directors have no current intention of utilising this authority. This authority will expire at the conclusion of the Annual General Meeting of the Company in 2021.

Notice of Meeting

Resolution 15, which is a Special Resolution, will be proposed to authorise the Directors to call general meetings of the Company (other than Annual General Meetings), on 14 clear days' notice.

The Company will also need to meet the Companies Act 2006 requirements for electronic voting before it may call a general meeting on 14 clear days' notice. The Directors confirm that, in the event that a general meeting is called, they will give as much notice as is practicable and will only utilise the authority granted by Resolution 15 in limited and time sensitive circumstances.

Recommendation

Your Board considers the passing of the resolutions to be proposed at the Annual General Meeting is likely to promote the success of the Company for the benefit of its members as a whole and are in the best interests of the Company and its shareholders as a whole.

Accordingly, the Directors unanimously recommend that shareholders should vote in favour of the resolutions, as they intend to do in respect of their own beneficial shareholdings.

Disclosure of Information to the Auditor

As required by Section 418 of the Companies Act 2006 each of the Directors who held office at the date of approval of this Directors' Report confirm that, so far as each of the Directors is aware, there is no relevant information of which the Company's auditors are unaware and the Directors have taken all the steps that they ought to have taken as Directors to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Independent Auditors

The Auditor, BDO LLP is willing to continue in office as the Auditor and a resolution to reappoint BDO LLP and authorise the Directors to determine the Auditor's remuneration for the ensuing year, will be proposed at the Annual General Meeting.

By Order of the Board

Richard Prickett
Chairman

25 October 2021

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

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;

•prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

•prepare a directors' report, a strategic report and a directors' remuneration report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for 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.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Website publication

The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Directors' confirmations

The Annual Report includes a fair review of the development and performance of the business and the financial position of the Company, together with a description of the principal risks and uncertainties that they face.

The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

In the case of each Director in office at the date the Director's Report is approved:

•so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware; and

•they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information

On behalf of the Board

Richard Prickett
Chairman

25 October 2021

Statement of Corporate Governance

Introduction

The UK Listing Authority requires all listed companies to describe how they have complied with the principles of the UK Corporate Governance Code published in 2018 ("the UK Code"), which is available on the Financial Reporting Council's website: www.frc.org.uk. The UK Code covers in particular the annual reappointment of Directors, Board diversity, external evaluation, the Board's responsibilities in relation to risk, and a clear explanation of business model and strategy.

The Association of Investment Companies also published a Code of Corporate Governance ("AIC Code"), in February 2019, and a Corporate Governance Guide for Investment Companies ("AIC Guide") which are available on the AIC's website: www.theaic.co.uk. The AIC Code, as explained by the AIC Guide, addresses all of the principles set out in Section 1 of the Governance Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to investment companies.

This is the first year that the Company has reported performance against the 2018 version of the Code and the 2019 version of the AIC Code, which considerably focus board's governance considerations on their company's purpose, culture, values, people where applicable, diversity and the integration of each of these thematic principles.

Statement of Compliance

The Board has considered the principles and recommendations of both the UK Code and the AIC Code and believes that the Company has complied with the applicable provisions throughout the year under review and up to the date of this report except as below.

The UK Code includes provisions relating to:

•The role of the chief executive;

•Executive directors' remuneration, including formation of a separate board committee and appointment of a remuneration consultant;

•The need for an internal audit function, including controls framework; and

•The appointment of a Senior Independent Director. As the AIC Code acknowledges in setting out additional provisions relevant to the industry, the above exceptions are not believed to be automatically relevant to externally managed investment companies. The directors, having regularly reviewed the Company's compliance, are therefore comfortable that the Company applies in full with both the Code and the AIC Code. This report further describes how this compliance is achieved.

The Board

The Chairman is responsible for the leadership of the Board and ensuring its effectiveness on all aspects of its role. Given the size and composition of the Board it is not felt necessary to appoint a Senior Independent Director. All Directors, are considered by the Board to be independent of the Investment Manager. Each of the Directors is independent in character and judgement and, there are no relationships, or circumstances which the Board considers likely to affect the judgement of the independent Directors.

New Directors receive an induction from the Company Secretary on joining the Board, and all Directors receive other relevant training as necessary on an ongoing basis.

The Board takes the view that independence is not compromised by length of tenure and that experience and continuity can add significantly to the Board's strength.

During the year ended 30 June 2021 the Board met seven times. In addition, there were two Audit Committee meetings, a Management Engagement Committee meeting, and a Nomination Committee meeting. Between meetings the Board maintains regular contact with the Investment Manager.

	Management Engagement Committee meetings	Nomination Committee meetings	Audit Committee meetings	Board meetings

R Ö Prickett* (Chairman)	1 (1)	1 (1)	-	7 (7)
C Cable	1 (1)	1 (1)	2 (2)	7 (7)
C M Casey	1 (1)	1 (1)	2 (2)	7 (7)
A G Evans	1 (1)	1 (1)	2 (2)	7 (7)
H F Green*	1 (1)	1 (1)	2 (2)	7 (7)

Directors have attended Board and Committee meetings during the year ended 30 June 2021 as follows (with their eligibility to attend the meeting in brackets).

*in addition to the Board Meeting schedule above, two additional board committee meetings were called and attended by Mr R Prickett and Mrs H Green.

The Board has a schedule of matters reserved to it for decision and the requirement for Board approval on these matters is communicated directly to the senior staff of the Investment Manager. Such matters include strategy, borrowings, treasury and dividend policy. Full and timely information is provided to the Board to enable the Directors to function effectively and to discharge their responsibilities. The Board also reviews the financial statements, performance and revenue budgets.

The Board has put in place necessary procedures to conduct, on an annual basis, an appraisal of the Chairman of the Board as well as a performance evaluation of the Board as a whole, the individual Directors and the Board Committees. This was conducted through a questionnaire and discussions based assessment process. The Chairman regularly reviews and agrees with each Director their training and development needs. The annual evaluation of the Board and the Directors has been completed and the Directors have concluded that the Board continues to function effectively and individually.

The Board has reviewed the Chairman's and Directors' other commitments and is satisfied that the Chairman and other Directors are capable of devoting sufficient time to the Company.

There is an agreed procedure for Directors to take independent professional advice if necessary and at the Company's expense. This is in addition to the access which every Director has to the advice and services of the Company Secretary BNP Paribas Securities Services, which is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with.

The Board has reviewed the Company's internal controls and principal risks and uncertainties. These are described in the Strategic Report above.

Committees of the Board

The Board has three principal committees: the Audit Committee, the Management Engagement Committee and the Nomination Committee. The terms of reference for these committees are available via the Company Secretary.

A separate remuneration committee has not been established as the Board consists of only five non-executive directors. The whole Board is responsible for setting directors' fees in accordance with the Remuneration Policy set out below, which is subject to periodic shareholder approval.

Audit Committee

The Audit Committee comprises all directors, with the exception of the Chairman of the Board, and is Chaired by Helen Green. Further details are provided in the Report of the Audit Committee below.

Management Engagement Committee

A separate Management Engagement Committee, which is chaired by Mr Prickett and comprises the full Board, has been established. The Management Engagement Committee annually reviews matters concerning the management contract which exists between the Company and the Investment Manager. Details of the Management Agreement are shown in note 3 to the financial statements.

Nomination Committee

The Nomination Committee is chaired by Mr Prickett and comprises the full Board. Possible new Directors are identified against the requirements of the Company's business and the need to have a balanced Board. The Terms of Reference of the Nomination Committee are available on request. External search consultants may be used to assist in the appointment of new Directors.

Every Director is entitled to receive appropriate training as deemed necessary. A Director appointed during the year is required, under the provisions of the Company's Articles of Association, to retire and seek election by shareholders at the next Annual General Meeting. In 2011, the Board decided that all Directors would retire annually and, if appropriate, seek re¬election.

Stewardship Code

The Financial Reporting Council ("FRC") published "The UK Stewardship Code" ("Code") for institutional shareholders in September 2012. The purpose of the Code is to enhance the quality of engagement between institutional investors and companies to help improve long-term returns to shareholders and the efficient exercise of governance responsibilities.

The FRC is encouraging institutional investors to make a statement of their commitment to the Code. The Board has delegated responsibility for actively monitoring the activities of investee companies to the Investment Manager. The Investment Manager is responsible for reviewing, on a regular basis, the annual reports, circulars and other publications produced by the investee company, and for attending company meetings. This includes environmental, social and governance matters, as further discussed above. The Investment Manager, in the absence of explicit instruction from the Board, is empowered to use discretion in the exercise of the Company's voting rights.

The Investment Manager's policy is to assess each voting opportunity individually and to vote only in cases where it is believed that the Company's best interests need to be protected. The Board has reviewed, and endorses, the Investment Manager's Statement of Compliance with the Code, which appears on the Investment Manager's website, at www.ncim.co.uk.

The Board receives reports from the Manager on the exercise by the Investment Manager of the Company's voting rights.

Bribery Prevention

The Board confirms it has zero tolerance to bribery and corruption in its business activities and take its responsibility to prevent bribery very seriously.

Criminal Finances Act 2017

In line with the requirements of The Criminal Finances Act 2017, the Directors confirm that the Company has a commitment to zero tolerance towards the criminal facilitation of tax evasion.

Statement of Corporate Governance

Principal decisions

Decision	Stakeholder interests
Review of dividend policy	The Board recognises the importance Shareholders place on the Company's dividend policy and is cognisant of the need to ensure the viability of the dividend. It was agreed it was in the best interests of the Company and Shareholders to maintain the dividend in the year under review.
Change of Service Provider	On 15 September 2020, BNP Paribas were appointed as Company Secretary, Administrator, Depositary, and Custodian to the Company, The Board have monitored the progress and are pleased with the current service levels.

Relations with Shareholders

The Notice of the Annual General Meeting ('AGM') included within the Annual Report and Accounts is sent out at least 20 working days in advance of the meeting. 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 or subsequent to the meeting when teas and coffees will be offered to shareholders if the meeting is not closed due to pandemic restrictions. The Company Secretary is available to answer general shareholder queries at any time throughout the year.

Purpose, Values and Culture

Employees, Social, Human Rights and
Environmental Matters

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 above because it is information which refers to events that have taken place during the course of the year.

By Order of the Board

Richard Prickett
Chairman,

25 October 2021

Report of the Audit Committee

Composition of the Audit Committee

•An Audit Committee has been established with written terms of reference and comprises four non-executive Directors, Mrs H F Green (Chair), Ms C Cable, Mr C M Casey and Mr A G Evans. The Audit Committee members have recent and relevant financial experience, and the Audit Committee as a whole has competence relevant to the sector in which the Company operates. The terms of reference of the Audit Committee are reviewed and reassessed for their adequacy on an annual basis and are disclosed on the Company's website. Further copies are available on request.

Role of the Audit Committee

A summary of the Committee's main audit review functions is shown below:

•to review and monitor the internal control systems and risk management systems on which the Company is reliant;

•to consider annually whether there is a need for the
Company to have its own internal audit function;

•to monitor the integrity of the half-yearly and annual financial statements of the Company by reviewing, and challenging where necessary, the actions and judgements of the Manager and Administrators;

•to meet with the external Auditor, BDO LLP ("BDO") to review their proposed audit programme of work and their findings. The Board shall also use this as an opportunity to assess the effectiveness of the audit process;

•to develop and implement the policy on the engagement
of the external Auditor to supply non-audit services;

•to review an annual statement from the Investment Manager and Administrator detailing the arrangements in place whereby the staff of the Investment Manager and of the Administrator may, in confidence, escalate concerns about possible improprieties in matters of financial reporting or other matters;

•to make recommendations in relation to the appointment of the external Auditor and to approve •

•to monitor and review annually the external Auditor's independence, objectivity, effectiveness, resources and qualification.

Annual Report and Financial Statements

The Board of Directors are responsible for preparing the Annual Report and financial statements. The Audit Committee advises the Board on the form and content of the Annual Report and Financial Statements, any issues which may arise and any specific areas which require judgement.

Auditor

As part of its review of the scope and results of the audit, during the year the Audit Committee considered and approved BDO's plan for the audit of the financial statements for the year ended 30 June 2021. At the conclusion of the audit BDO did not highlight any issues to the Audit Committee which would cause it to qualify its audit report. BDO issued an unqualified audit report which is included below.

It has been agreed that all non-audit work to be carried out by BDO must be approved in advance by the Audit Committee and any special projects must also be approved in advance. KPMG provided tax services for the Company during the year, independently of BDO as the Auditor.

As part of the review of auditor independence and effectiveness, BDO has confirmed that it is independent of the Company and has complied with relevant auditing standards. In evaluating BDO, the Audit Committee has taken into consideration the standing, skills and experience of the firm and the audit team. The Audit Committee, from direct observation and enquiry of the Investment Manager and Administrator, is satisfied that BDO provides effective independent challenge in carrying out its responsibilities.

Following professional guidelines, the audit partner rotates after five years. The audit partner is in her fifth year of appointment. Following a discussion with the Investment Manager, the Audit Committee considers the main risks within the financial statements to be the valuation and ownership of quoted, unquoted and level 2 investments held by the Company.

In order to address this the Company has appointed an Investment Manager, Custodian and Depositary with clearly defined contracts and any breaches of these, or any law or regulation that the Company is required to comply with, are reported to the Board. The Board receives regular updates from the Investment Manager on the valuation of unquoted investments and assesses the information provided in establishing the valuations used within the net asset value. The Company also receives regular reporting on internal controls.

Internal Controls

The Board is ultimately responsible for the Company's system of internal control and for reviewing its effectiveness. Following publication of the Financial Reporting Council's "Internal Control: Revised Guidance for Directors on the Combined Code" (the "FRC guidance") the Board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. This process has been in place for the year under review and up to the date of approval of this Annual Report and is regularly reviewed by the Board and accords with the FRC Guidance.

The Board has reviewed the effectiveness of the system of internal control. In particular, it has reviewed and updated the process for identifying and evaluating the significant risks affecting the Company and policies by which these risks are managed. The significant risks faced by the Company are as follows:

•financial;

·operational; and

•compliance.

The key components designed to provide effective internal control are outlined below:

•BNP Paribas Securities Services as Company Secretary and Administrator together with the Investment Manager prepares forecasts and management accounts which allow the Board to assess the Company's activities and review its performance;

•the Board and Investment Manager have agreed clearly defined investment criteria, specified levels of authority and exposure limits. Reports on these issues, including performance statistics and investment valuations, are regularly submitted to the Board and there are meetings with the Investment Manager as appropriate;

•as a matter of course the Investment Manager's compliance department continually reviews the Investment Manager's operations and reports to the Board on a quarterly basis;

•written agreements are in place which specifically define the roles and responsibilities of the Investment Manager, Administrator and other third party service providers;

•the Board has considered the need for an internal audit function but, because of the compliance and internal control systems in place at the Investment Manager and the Administrator, has decided to place reliance on the Investment Manager's and the Administrator's systems and their internal audit procedures.

The Audit Committee has established a set of ongoing processes designed to meet the particular needs of the Company in managing the risks to which it is exposed. The process is one whereby the Investment Manager has identified the key risks to which the Company is exposed, and recorded them on a risk matrix together with the controls employed to mitigate these risks. A residual risk rating has been applied to each risk. The Audit Committee is responsible for reviewing the risk matrix and associated controls before recommending to the Board for consideration and approval, challenging the Investment Manager's assumptions to ensure a robust internal risk management process.

The Audit Committee formally reviewed the updated risk matrix during the year and will continue to do so on an annual basis. By their nature, these procedures provide a reasonable, but not absolute, assurance against material misstatement or loss. Regular reports will be provided to the Audit Committee highlighting material changes to risk ratings.

During the year, the Audit Committee also discussed and reviewed the internal controls frameworks in place at the Investment Manager and the Administrator. Discussions focused on three lines of defence: assurances at operational level; internal oversight; and independent objective assurance. The Audit Committee concluded that these frameworks were appropriate for the identification, assessment, management and monitoring of financial and regulatory risks, with particular regard to the protection of the interests of the Company's shareholders.

Internal control systems are designed to meet the Company's particular needs and the risks to which it is exposed. Accordingly, the internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and by their nature can only provide reasonable and not absolute assurance against mis-statement and loss.

Helen Green

Chair of the Audit Committee

25 October 2021

Directors' Remuneration Report

The Board presents the Directors' Remuneration Report for the year ended 30 June 2021 which has been prepared in accordance with sections 420-422 of the Companies Act 2006.

Statement by the Chairman

The remuneration of the Directors has been set in order to attract individuals of a calibre appropriate to the future development of the Company. The Company's policy on Directors' remuneration, together with details of the remuneration of each Director, is shown below.

An ordinary resolution for the approval of this Report will be put to the members at the forthcoming Annual General Meeting.

Remuneration Committee

The full Board acts as the Remuneration Committee whose Chairman is the Chairman of the Company. The determination of the Directors' fees is a matter dealt with by the whole Board

Directors' Remuneration Policy

The Board's policy is that the remuneration of Directors should reflect the experience of the Board as a whole, be fair and comparable to that of other relevant investment trusts that are similar in size and have similar investment objectives and structures. Furthermore, the level of remuneration should be sufficient to attract and retain the Directors needed to oversee properly the Company and to reflect the specific circumstances of the Company, the duties and responsibilities of the Directors and the value and amount of time committed to the Company's affairs.

The fees for the non-executive Directors are determined within the limits set out in the Company's Articles of Association. The present limit is £175,000 per annum in aggregate and the approval of shareholders in a general meeting would be required to further increase this limit. At the prevailing level of Directors' fees the aggregate amount paid to the Company's Directors during the year to 30 June 2021 was £131,000.

Non-executive Directors are not eligible for bonuses, pension benefits, share options, long¬term incentive schemes or other benefits. It is the Board's policy that Directors do not have service contracts, but new Directors are provided with a letter of appointment which are kept on the Company Secretary's system.

The terms of Directors' appointments and the Company's Articles of Association provide that Directors should retire and be subject to election at the first Annual General Meeting after their appointment. Directors are obliged to retire by rotation, and to offer themselves for re-election by shareholders at least every three years after that. Any Director who has served on the Board for more than nine years will offer himself for re-election annually. However, the Board has agreed that all Directors will retire annually and, if appropriate, seek re-election. There is no notice period and no provision for compensation upon early termination of appointment.

Director	Date of Initial Appointment	Due date for Re-election
R Ö Prickett	30 November 2006	AGM 2021
C Cable	1 October 2017	AGM 2021
C M Casey	1 October 2017	AGM 2021
A G Evans	26 September 2014	AGM 2021
H F Green	1 September 2015	AGM 2021

Annual Report on Directors' Remuneration

Directors' Emoluments (audited)

The Directors who served in the year received the following fees:

	2021 £'000	2020 £'000
R Ö Prickett2	33	30
C Cable	25	23
C M Casey	25	23
H F Green1,3	28.5	26
A G Evans	25	23
Totals	136.5	125

The amounts paid by the Company to the Directors were for services as non-executive Directors excluding expenses.

1 Chairman of the Audit Committee.

2 Fees paid to European Sales Company Ltd.

3 Fees paid to Saffery Champness Management International Limited.

For the year ended 30 June 2021, the annual remuneration payable was as follows:

£
Chairman	32,000
Chair of the Audit Committee	27,000
Director	24,000

2019	2020	%	2021	%
£'000	£'000	increase	£'000	increase
109	125	14.7	131	4.8

The Committee has agreed that no changes will be made to the Board's remuneration with effect from 1 July 2021.

Relative Importance of Spend on Pay

The table below sets out, in respect of the financial year ended 30 June 2021 and the preceding financial year:

a) the remuneration paid to the Directors; and

b) the distribution made to shareholders by way of dividend.

	Year ended 30 June 2021	Year ended 30 June 2020	% Change
Total remuneration	£131,000	£125,000	4.8
Dividend	£3,746,000	£3,746,000	-

Directors' Interests (audited)

Biographies of the Directors are shown above. The interests (all of which were beneficial) of the Directors who held office at the year-end in the shares of the Company were as follows: All of the Directors holdings are beneficial. No changes to these holdings have been reported up to the date of this report.

	Ordinary shares 2021	Ordinary shares 2020
R Ö Prickett	105,000	90,000
C Cable	-	-
C M Casey	6,500	6,500
A G Evans	10,540	10,540
H F Green	5,500	5,500

Company Performance

The Board is responsible for the Company's investment strategy and performance, although the management of the Company's investment portfolio is delegated to the Investment Manager through the investment management agreement, as referred to in the Directors' Report above.

The following graph compares for the ten years to 30 June 2021 the share price total return (assuming all dividends are reinvested) to ordinary shareholders compared to the total shareholder return on a notional investment made up of shares of the same kinds and number as those by reference to which a composite index, weighted as to eighty percent EMIX Global Mining Index (sterling adjusted) and twenty percent Credit Suisse High Yield Index (sterling adjusted), is calculated. This composite index was chosen as it represents a comparable mix of mining and resource equities and fixed interest securities.

Voting at Annual General Meeting

In accordance with the Companies Act 2006, the Company is required to seek shareholder approval of its remuneration policy on a triennial basis. An ordinary resolution for the approval of the remuneration policy was approved by shareholders at the AGM held on 9 December 2018, with 99.48% of votes cast (including votes cast at the Chairman's discretion) in favour and 0.39% votes cast against. It is the Board's intention that the remuneration policy will be put forward for approval at the next Annual General Meeting scheduled to take place on the 14 December 2021.

The Directors' Remuneration report was last approved by shareholders at the AGM held on 9 December 2020 with 99.26% of the votes cast (including votes cast at the Chairman's discretion) in favour and 0.74% votes cast against.

An ordinary resolution for the approval of the Annual Report on Directors' Remuneration will be put to an advisory shareholder vote at the forthcoming AGM.

Approval

The Directors' Remuneration Report was approved by the Board of Directors and signed on its behalf on 25 October 2021.

Richard Prickett
Chairman

Independent Auditor's Report to the Members of CQS Natural Resources Growth and Income PLC

Opinion

In our opinion the financial statements:

•give a true and fair view of the state of the Company's affairs as at 30 June 2021 and of its net return for the year then ended;

•have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

·have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of CQS Natural Resources Growth and Income plc (the 'Company') for the year ended 30 June 2021 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, the Cash Flow Statement and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the audit committee.

Independence

Following the recommendation of the Audit Committee, we were appointed by the Board of Directors on 23 May 2017 to audit the financial statements for the year ended 30 June 2017 and subsequent financial periods. In respect of the year ended 30 June 2021 we were reappointed as auditor by the members of the Company at the annual general meeting held on 9 December 2020. The period of total uninterrupted engagement including retenders and reappointments is five years, covering the years ending 30 June 2017 to 30 June 2021. We remain independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the Company.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors' assessment of the Company's ability to continue to adopt the going concern basis of accounting included:

•Obtaining the Directors' assessment of the going concern status of the Company and evaluating the Directors' method of assessing going concern in light of market volatility and the present uncertainties such as the impact of Covid-19.

•Challenging management's assumptions and judgements made by performing an independent liquidity analysis of the investment portfolio and assessing whether the Company can meet its short term obligations.

In relation to the Company's reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors' statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Overview

2021 2020

Valuation and ownership of

investments / /

Revenue Recognition (*) / X

*This is a new KAM in the current year. The
revenue is material and is a key factor in
determining performance.

£1,150,000 (2020: £650,000) based on 1% (2020: 1%) of Net Assets

An overview of the scope of our audit

Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company's system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.

Key audit matter

How We Addressed the Key audit matter in the Audit

Valuation and ownership of investments (note 1 and note 9 of the financial statements) We consider the valuation and ownership of investments (note 9) to be the most significant audit area as investments represent the most significant balance in the financial statements and underpin the principal activity of the entity. The valuation of investments is a key accounting estimate where there is an inherent risk of management override arising from the investment valuations. The risk is reduced for the quoted investments which are valued by the administrator. However, the level 2 and level 3 valuations are prepared by the Alternative Investment Fund Manager (AIFM) and Investment Manager, who is remunerated based on the net asset value of the Company increasing the risk of management override. Furthermore, the valuation of level 2 and level 3 investments is subject to the Investment Manager's judgement.

In respect of 100% of the quoted investment valuations (£115,513k/ 89% of total

investment portfolio) we have:

· checked the year end valuation to externally quoted prices from independent sources;

· considered contra indicators of value which suggest that the year end price is not the most appropriate indication of fair value such as potential liquidity issues;

· confirmed the investment holdings to independently received third party confirmation from the custodian; and

· recalculated the investment value as at year-end by multiplying the independently confirmed holdings with external bid prices.

In respect of 100% of the fixed income and preference share valuations (£13,421k/ 10% of

the total investment portfolio) we have:

· checked the year end valuation to externally quoted prices from independent sources;

· considered contra indicators of value which suggest that the year end price is not the most appropriate indication of fair value such as potential liquidity issues;

· considered the impact on the valuation of any non-performance of the investment and/or defaults on interest payments; and

· confirmed the investment holdings to independently received third party confirmation from the custodian.

In respect of 100% of the derivative (Warrant) investments (£418k/ <1% of the total investment portfolio) we have:

· considered the appropriateness of the valuation methodology against the IPEV guidelines and the appropriateness of the judgemental inputs into the model applied by the investment manager;

· confirmed the investment holdings to independently received third party confirmation from the custodian; and

· recalculated the investment value as at year end.

In respect of a sample of unquoted investments (£53k/ <1%) we have:

· considered the rationale for investments valued at nil and performed independent research to identify any indications of undervaluation;

· considered whether the valuation methodology is the most appropriate in the circumstances under the International Private Equity and Venture Capital Valuation ("IPEV") Guidelines;

· re-performed the calculation of the investment valuations;

· challenged the investment manager on the significant assumptions made; and

· confirmed the investment holdings to independently received third party confirmation from the custodian. We also considered the completeness and accuracy of investment related disclosures.

Key observations:

We found that management's valuation of the portfolio of investments, in particular the assumptions used, were supported by the audit evidence obtained.

Revenue Recognition (Note 1 and Note 2 to

Financial Statements)

Investment income is a significant audit area as it is material and impacts the Company's net asset value and distributable reserves. There is a presumed risk of fraud relating to the existence of revenue recognition in that revenue may be misstated through improper recognition. There is a risk over revenue completeness, i.e. that dividends have been announced but not received and have not been recognised. There is a risk over recoverability, i.e. that interest on bonds is accrued but not received and not recoverable. There is a further risk over presentation of revenue, that the classification of income between revenue and capital is not appropriate.

We assessed the accounting policy for income recognition for compliance with accounting standards and the Association of Investment Companies Statement of Recommended Practice (the 'AIC SORP') and performed testing to check the nature of the income that such income has been accounted for in accordance with this stated accounting policy.

In respect of existence, we tested dividend and preference income receipts by agreeing the dividend rates for 100% of investments to independent third party sources.

We set expectations for and tested the validity of receipts from fixed interest investments.

In respect of completeness, we tested that the appropriate income had been received in

the year by reference to independent data of dividends declared on 100% of investment

holdings in the portfolio.

We tested the allocation and presentation of income between the revenue and capital return columns of the Income Statement in line with the requirements set out in the AIC

SORP.

Key observations:

No errors above our reporting threshold were detected, in respect of recognition or allocation of income from investments, as a result of our work performed.

Our application of materiality

We consider materiality to be the magnitude by which misstatements, individually or in aggregate, including omissions, could reasonably influence the economic decisions of users that are made on the basis of the financial statements. We apply the concept of materiality both in planning and performing our audit, and in evaluating the results of our work. Misstatements below these levels will not necessarily be evaluated as immaterial as we also take into account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:

	Financial statements
Materiality	2021 2020
Basis for determining materiality	£1,150,000 £650,000
	1% of Net Assets 1% of Net Assets
Rationale for the benchmark applied	- A principal consideration for members of the Company in assessing the financial performance given that the principal activity of the Company is that of an
	Investment Trust.
	- The nature and disposition of the investment portfolio.
Performance materiality	£862,500 £487,000
Basis for determining performance materiality	75% of materiality 75% of materiality
Rationale for performance materiality	- Number of unadjusted audit differences in prior year.
	- Number of accounts subject to estimation.

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £57,500 (2020: £13,000), being 5% (2020: 2%) of materiality as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We have increased our clearly trivial for a number of reasons, firstly, a low history of errors in previous years, secondly due to a limited number of unadjusted brought forward errors and thirdly due to the low complexity of the audited entity.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Corporate governance statement

The Listing Rules require us to review the Directors' statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Company's compliance with the provisions of the UK Corporate Governance Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.

Going concern and longer-term viability	• •	the Directors' statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified; and the Directors' explanation as to their assessment of the entity's prospects, the period this assessment covers and why the period is appropriate.
Other Code provisions	•	directors' statement on fair, balanced and understandable;
	•	board's confirmation that it has carried out a robust assessment of the emerging and principal risks;
	•	the section of the annual report that describes the review of effectiveness of risk management and internal control systems; and
	•	the section describing the work of the Audit Committee.

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

Strategic report and Directors' report

In our opinion, based on the work undertaken in the course of the audit:

·the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

·the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.

Directors' remuneration

In our opinion, the part of the Directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

Matters on which we are required to report by exception

In our opinion, based on the work undertaken in the course of the audit:

·adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

·the financial statements and the part of the Directors' remuneration report to be audited are not in agreement with the accounting records and returns; or

·certain disclosures of Directors' remuneration specified by law are not made; or

·we have not received all the information and explanations we require for our audit.

Responsibilities of Directors

As explained more fully in the Statement of Directors' Responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

We gained an understanding of the legal and regulatory framework applicable to the entity and the industry in which it operates and considered the risk of acts by the Company which were contrary to applicable laws and regulations, including fraud. These included but were not limited to the Companies Act 2006, sections 1158 and 1159 of the Corporation Tax Act, the UK Listing rules, the DTR rules, FRS 102 accounting standards, VAT and other taxes.

We focused on laws and regulations that could give rise to a material misstatement in the Company's financial statements and the susceptibility of the Company's financial statements to material misstatements including fraud. Our tests included, but were not limited to:

•agreement of the financial statement disclosures to underlying supporting documentation;

•enquiries of the Administrator, Alternative Investment Fund Manager (AIFM) and Those Charged With Governance;

•testing of journal postings made during the year to identify potential management override of controls;

•the procedures outlined in our key audit matters above;

•review of minutes or Board meeting minutes throughout the period; and

•obtaining an understanding of the control environment in monitoring compliance with laws and regulations.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Vanessa-Jayne Bradley

(Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London, UK

25 October 2021

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Statement of Comprehensive Income

		Year ended 30 June 2021 Revenue Capital Total			Year ended 30 June 2020 Revenue Capital Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments held at fair value through profit or loss	9	-	52,048	52,048	-	(9,524)	(9,524)
Exchange losses		-	(25)	(25)	-	(9)	(9)
Income	2	3,080	-	3,080	3,070	-	3,070
Investment management fee	3	(285)	(854)	(1,139)	(206)	(617)	(823)
Other expenses	4	(563)	-	(563)	(463)	-	(463)
Net return before finance costs and taxation		2,232	51,169	53,401	2,401	(10,150)	(7,749)
Interest payable and similar charges	5	(51)	(152)	(203)	(62)	(184)	(246)
Net return on ordinary activities before taxation		2,181	51,017	53,198	2,339	(10,334)	(7,995)
Tax on ordinary activities	6	(110)	-	(110)	(101)	70	(31)
Net return attributable to equity shareholders		2,071	51,017	53,088	2,238	(10,264)	(8,026)
Return per ordinary share (pence)	8	3.10p	76.27p	79.37p	3.35p	(15.35)p	(12.00)p

The 'total' column of this statement represents the Company's profit and loss account, prepared in accordance with UK GAAP. All revenue and capital items in this statement derive from continuing operations.

A statement of other comprehensive income is not presented as all gains and losses of the Company have been reflected in the above Statement of Comprehensive Income.

The accompanying notes are an integral part of the financial statements.

Balance Sheet

	Notes	As at 30 June 2021 £'000	As at 30 June 2020 £'000
Fixed assets
Investments at fair value through profit or loss	9	129,353	76,916
Current assets
Debtors	10	475	402
Cash at bank		2,887	1,027
		3,362	1,429
Creditors: amounts falling due within one year	11	(1,396)	(368)
Loan: amount falling due within one year	12	(16,000)	(12,000)
Net current liabilities		(14,034)	(10,939)
Net assets		115,319	65,977
Capital and reserves
Called-up share capital	13	16,722	16,722
Special distributable reserve		28,868	30,386
Share premium		4,851	4,851
Capital reserve		64,878	13,861
Revenue reserve		-	157
Equity shareholders' funds		115,319	65,977
Net asset value per share 14	14	172.40p	98.64p

Company number: 02978531

These financial statements were approved by the Board of Directors and authorised for issue on 25 October 2021 and were signed on its behalf by:

Richard Prickett
Chairman

The accompanying notes are an integral part of the financial statements.

Statement of Changes in Equity

For the year ended 30 June 2021


	Share capital £'000	Share premium account £'000	Special distributable reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
Balance at 30 June 2020 Return on ordinary activities after taxation Dividends paid (see note 7)	16,722 - -	4,851 - -	30,386 - (1,518)	13,861 51,017 -	157 2,071 (2,228)	65,977 53,088 (3,746)
Balance at 30 June 2021	16,722	4,851	28,868	64,878	-	115,319

For the year ended 30 June 2020	Share capital	Share premium account	Special distributable reserve	Capital reserve	Revenue reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 June 2019 Return on ordinary activities after taxation	16,722 -	4,851 -	30,386 -	24,125 (10,264)	1,665 2,238	77,749 (8,026)
Dividends paid (see note 7)	-	-	-	-	(3,746)	(3,746)
Balance at 30 June 2020	16,722	4,851	30,386	13,861	157	65,977

The special distributable reserve and the revenue reserve represents the amount of the Company's reserves distributable by way of dividend. The accompanying notes are an integral part of the financial statements.

Cash Flow Statement

Notes	Notes	Year ended 30 June 2021 £'000	Year ended 30 June 2020 £'000
Operating activities
Investment income received		3,022	3,112
Deposit interest received		-	2
Investment management fees paid		(1,138)	(781)
Other payments		(428)	(484)
Net cash inflow from operating activities	15	1,456	1,849
Investing activities
Purchases of investments		(20,484)	(18,616)
Disposals of investments		20,862	19,329
Net cash inflow from investing activities		378	713
Financing activities
Equity dividends paid		(3,746)	(3,746)
Loan funding		4,000	1,000
Loan interest		(203)	(246)
Net cash inflow/(outflow) from financing activities		51	(2,992)
Increase/(decrease) in net cash		1,885	(430)
Reconciliation of net cash flow to movement in net cash
Increase/(decrease) in cash in the year		1,885	(430)
Exchange losses		(25)	(9)
Movement in net cash in the year		1,860	(439)
Opening net cash at 1 July		1,027	1,466
Closing net cash at 30 June		2,887	1,027

The accompanying notes are an integral part of the financial statements.

Notes to the Financial Statements

for the year to 30 June 2021

1 Accounting Policies

CQS Natural Resources Growth and Income PLC is a public company limited by shares, it was incorporated in accordance with the Laws of

England and Wales, details of the registered office are included below.

A summary of the principal accounting policies adopted is set out below.

(a) Basis of Accounting

The financial statements have been prepared in accordance with Financial Reporting Standard 102 and the Statement of Recommended Practice (SORP) for "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by the Association of Investment Companies dated April 2021. They have also been prepared on a going concern basis and on the assumption that approval as an investment trust will continue to be granted. These financial statements have been prepared in line with the Board's analysis of the impact of Covid-19 on the Company detailed above.

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in operational existence for at least twelve months from the date of approval of these financial statements. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. Further detail is included in the Directors' Report above.

(b) Financial assets

All financial assets are initially recognised at fair value net of transactions costs incurred. All financial assets are recorded at the date on which the Company became party to the contractual requirements of the financial asset. Subsequently, they are measured at fair value through profit or loss.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

All financial liabilities are initially recognised at fair value net of transaction costs incurred. All financial liabilities are recorded on the date onwhich the Company becomes party to the contractual requirements of the financial liability.

Non-derivative financial liabilities such as loan equivalents, trade and other payables with fixed and determinable payments and not quoted in an active market, are initially recognised at fair value (which is equivalent to cost) plus transaction costs that are directly attributable to the acquisition and are subsequently carried at amortised cost. Bank loans are recognised at cost, being the fair value of the consideration received.

Any issue costs will be charged in the year in which they are incurred. The amounts falling due for repayment within one year are included "under Loan: amount falling due within one year" in the Statement of Financial Position and amounts falling due after one year are included "under Loan: amount falling due after more than one year" in the Statement of Financial Position.

(d) Fixed asset investments

Financial assets which comprise equity shares, convertible bonds and fixed income securities, are classified as held at fair value through profit or loss as the financial assets are managed and their performance 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 Statement of Comprehensive Income. 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, adjusted for accrued.

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 (IPEV) valuation guidance. Unquoted financial assets are valued by the Directors 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. For convertible bonds this also includes consideration of their discounted cash flows and underlying equity value based on information provided by the Investment Manager.

(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. 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 Statement of Comprehensive Income 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 ivestment 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.

(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 in capital reserves. The functional currency of the Company, being its statutory reporting currency, is 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) Reserves

(a)Share capital - represents the nominal value of authorised and allocated, called-up and fully paid shares issued. The reserve is non distributable.

(b)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.

- 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. The reserve is non-distributable.

(d) Special reserve - created from the Court cancellation of the share premium account which had arisen from premiums paid at launch. Available as distributable profits.

(e)Revenue reserve - the net profit/(loss) arising in the revenue column of the Statement of Comprehensive Income is added to or deducted from this reserve. Available for paying dividends.

(l) Single Segmental Reporting

The company is engaged in a single segment of business, being investment business, consequently no business segmental analysis is provided.

(m) Critical accounting estimates and judgements

The preparation of the financial statements necessarily requires the exercise of judgement both in application of accounting policies which are set out above and in the selection of assumptions used in the calculation of estimates. These estimates and judgements are reviewed on an ongoing basis and are continually evaluated based on historical experience and other factors.

However, actual results may differ from these estimates. The only significant accounting estimate and judgement is the valuation of the unquoted and level 2 investments which is described in note 1(d) above.

The main judgements and estimates used in calculating the price of the Warrants are:

Firstly, the derivative valuation model used to value the warrants. The Investment Manager has selected the Black Scholes Model to value the unlisted warrants as this is a widely accepted warrant valuation model to use.

Secondly, the inputs into the Black-Scholes model as outlined below.

For any unlisted securities the time to maturity to estimate the historic volatility required in the calculations underpinning the Black Scholes Pricing Model is used. The volatility of the underlying equity is obtained, and if this is not available or is not reflective, due to a lack of liquidity etc., then the Company will look to use the volatility of the parent company or an appropriate proxy.

For any securities 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 days 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.

In determining the risk free rate, the swap price discount curve is used for the relevant currency which is derived from data retrieved from Bloomberg.

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 the current portfolio as there is a wide range of time-to-maturities.

- 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 contain Warrants listed and traded in a range of currencies.

2 Income

	2021 £'000	2020 £'000
Income from investments*
UK dividend income	176	53
UK fixed interest	-	109
Preference share dividend income	169	285
Overseas dividend income	2,102	1,633
Overseas fixed interest	633	988
	3,080	3,068
Other income†
Deposit interest	-	2
	-	2
Total income	3,080	3,070
Total income comprises:
Dividends	2,447	1,971
Fixed interest securities	633	1,097
Deposit interest	-	2
	3,080	3,070

*All investment income arises on investments valued at fair value through Profit or Loss.
†Other income on financial assets not valued at fair value through Profit or Loss.

3 Investment Management Fee

2021

Revenue

£'000

2021

Capital

£'000

2021

Total

£'000

2020

Revenue

£'000

2020

Capital

£'000

2020

Total

£'000

Investment management fee

285

854

1,139

206

617

823

The Company's Investment Manager is CQS which in turn has delegated this function to NCIM. The contract between the Company and CQS may be terminated by either party giving not less than six months' notice of termination.

The Company's annual management fee is 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 CQS for management fees at the year end was £115,000 (2020: £114,877) as per the Investment Management Agreement.

Investment management fees have been allocated 75% to capital and 25% to revenue (2020: 75% capital, and 25% revenue).

4 Other Expenses (including irrecoverable VAT)

	2021 Revenue £'000	2021 Capital £'000	2021 Total £'000	2020 Revenue £'000	2020 Capital £'000	2020 Total £'000
Secretarial and administration fees	124	-	124	78	-	78
Directors' fees	131	-	131	125	-	125
Employer's National Insurance contributions	2	-	2	3	-	3
Auditor remuneration:
- fees payable for the audit of the annual accounts	35	-	35	30	-	30
Tax advisor remuneration for tax services	10	-	10	10	-	10
Directors' and Officers' liability insurance	7	-	7	9	-	9
Registrar fees	19	-	19	13	-	13
Custody fees	38	-	38	36	-	36
Depositary fees	46	-	46	15	-	15
Promotional activities	34	-	34	34	-	34
Stock exchange fees	18	-	18	17	-	17
Advisory and legal fees	76	-	76	54	-	54
Irrecoverable VAT	18	-	18	15	-	15
Other	5	-	5	24	-	24
	563	-	563	463	-	463
No pension contributions were payable in respect of any of the Directors.
The Company does not have any employees.
5 Interest Payable
	2021	2021	2021	2020	2020	2020
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Interest on bank loan	51	152	203	62	184	246

Interest payable on the bank loan has been allocated 75 per cent to capital and 25 per cent to revenue (2020: 75% capital, and 25% revenue).

6 Tax on Ordinary Activities

	2021 Revenue	2021 Capital	2021 Total	2020 Revenue	2020 Capital	2020 Total
	£'000	£'000	£'000	£'000	£'000	£'000
Corporation tax	-	-	-	70	(70)	-
Overseas taxation	110	-	110	31	-	31
Total tax charge/(credit)	110	-	110	101	(70)	31

Reconciliation of Tax Charge

The tax assessed for the year is the current standard rate of corporation tax in the UK. A reconciliation of the total tax charge is set out below:

	2021 Total £'000	2020 Total £'000
Return on ordinary activities before taxation	53,198	(7,995)
Corporation tax at standard rate of 19% (2020: 19%)	10,108	(1,519)
Effects of:
Non taxable income	(465)	(374)
Non taxable (gains)/losses	(9,889)	1,810
Overseas withholding tax	110	31
Excess management expenses (deferred tax not recognised)	241	81
Non taxable exchange gains	5	2
Current year tax charge	110	31

Due to the Company's status as an Investment Trust, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided for deferred tax on capital gains and losses arising on the revaluation or disposal of investments.

At 30 June 2021 the Company had surplus management expenses of £9,508,000 (2020: £8,144,000) on which no deferred tax asset has been recognised.

7 Dividends

	2021 Revenue £'000	2020 Revenue £'000
Amounts recognised as distributions to equity holders in the year:
- Fourth interim dividend for the year ended 30 June 2020 of 1.82p (2019 - 1.82p) per ordinary share	1,217	1,217
- First interim dividend for the year ended 30 June 2021 of 1.26p (2020 - 1.26p) per ordinary share	843	843
- Second interim dividend for the year ended 30 June 2021 of 1.26p (2020 - 1.26p) per ordinary share	843	843
- Third interim dividend for the year ended 30 June 2021 of 1.26p (2020 - 1.26p) per ordinary share	843	843
	3,746	3,746
Amounts relating to the year but not paid at the year end:
- Fourth interim dividend for the year ended 30 June 2021 of 1.82p (2020 - 1.82p) per ordinary share	1,217	1,217

In accordance with FRS 102 the fourth interim dividend has not been included as a liability in these accounts and will be recognised in the period in which it is 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 30 June 2021 £'000	Year ended 30 June 2020 £'000
Revenue return	2,071	2,238
Capital return	51,017	(10,264)
Total return	53,088	(8,026)
	Number	Number
Weighted average ordinary shares in issue	66,888,509	66,888,509
Revenue return per ordinary share (pence)	3.10	3.35
Capital return per ordinary share (pence)	76.27	(15.35)
Total return per ordinary share (pence)	79.37	(12.00)

For the years ended 30 June 2021 and 30 June 2020 there was no dilution to the revenue return per ordinary share. Additionally, for the year ended 30 June 2021 and 30 June 2020 there was no dilution to the capital return per ordinary share.

9 Investments

	2021 £'000	2020 £'000
Equity shares	115,513	61,238
Fixed income securities	7,770	9,886
Preference shares	5,652	5,430
Placings	-	1
Warrants	418	361
	129,353	76,916
Included above are unquoted investments of value £53,000 (2020: £2,137,701).

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. However, the Company may continue to hold securities that cease to be quoted or listed if the Investment Manager considers this to be appropriate.

All investments are designated fair value through profit or loss at initial recognition, therefore all gains and losses arise on investments designated at fair value through profit or loss.

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.

If the market value of the Level 3 investments fell by 5 per cent, the impact on the profit or loss and the net asset value would have been negative £0.01 million (2020: negative £0.107 million). If the value of the Level 3 investments rose by the same amount, the effect would have been equal and opposite. 5% has been selected as this level of change is considered to be reasonable based on observations of current market conditions.

As at 30 June 2021	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Financial assets at fair value through profit or loss
Quoted equities	114,313	1,147	-	115,460
Quoted preference shares	5,652	-	-	5,652
Quoted bonds	-	7,770	-	7,770
Quoted warrants	72	62	-	134
Unquoted equities	-	-	53	53
Unquoted warrants	-	-	284	284
Total	120,037	8,979	337	129,353


As at 30 June 2020	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Financial assets at fair value through profit or loss
Quoted equities	59,431	-	-	59,431
Quoted preference shares	4,692	738	-	5,430
Quoted	-	9,886	-	9,886
Unquoted equities	-	-	1,808	1,808
Quoted warrants 31	31	-	-	31
Unquoted warrants	-	-	330	330
Total	64,154	10,624	2,138	76,916

In line with the revised SORP issued in April 2021, 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) above.

The company received £20,862,000 (2020: £19,329,000) from investments sold in the year. The book cost of these investments when they were purchased was £15,090,000 (2020: £17,688,000).

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.

The Level 3 investments at the year end, along with the respective valuation methods utilised are as follows:

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 % holding in the company. The respective interests in these holdings are detailed above.

These securities are priced using evaluated prices from a third party vendor, together with a price comparison made to 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 - recognising that 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.

The gains and losses included in the above table have all been recognised within gains/(losses) on investments in the Statement of Comprehensive Income above. The Directors believe that the use of reasonable possible alternative assumptions for its Level 3 holdings would not result in a valuation significantly different from the valuation included in these financial statements.

10 Debtors

	2021	2020
Gains/(losses) on investments	£'000	£'000
Realised gains on sale	4,878	1,641
Unrealised gains/(losses) on investments	47,170	(11,165)
Gains/(losses) on investments	52,048	(9,524)

During the year the Company incurred transaction costs on the purchases of £14,000 (2020: £13,136) and transaction costs on sales of £15,000 (2020: £16,000)

	2021 £'000	2020 £'000
Amounts due from brokers	136	-
Prepayments and accrued income	175	276
Overseas tax recoverable	153	115
VAT recoverable	11	11
	475	402

11 Creditors: Amounts Falling Due Within One Year	2021 £'000	2020 £'000
Amounts due to brokers	897	-
Corporation tax	163	163
Other creditors	336	205
	1,396	368
Included within other creditors is £115,000 (2020: £115,000) due to CQS in respect of management fees.
12 Bank Loan Facility
	2021	2020
	£'000	£'000
Bank loan facility	16,000	12,000

The Company has an unsecured loan facility with Scotiabank Europe Plc ("Scotiabank"). The facility expired on 17 September 2021 and has been renewed for a further two years expiring on the 17 September 2023.

As at the year end the unsecured loan facility had a limit of £20 million of which £16 million was drawn down at the year end at an interest rate of 1.14%.

During the year the covenants of the loan facility have been met. The following are the covenants for the facility:

·the borrower shall not permit the adjusted asset coverage to be less than 3.5 to 1;

·the borrower shall not permit the net asset value to be less than £30,000,000; and

·the loan facility is rolled over every three months and can be cancelled at any time.

Reconciliation of Bank loan facility (excluding interest)

At 30 June 2020

£'000

Cash flow

£'000

Currency movements

£'000

At 30 June 2021

£'000

Bank facility

12,000

4,000

16,000

13 Share Capital

2021 Shares

2021

£'000

Allotted, called up and fully-paid

Total issued ordinary shares of 25p each as at 1 July 2020

66,888,509

16,722

Total issued ordinary shares of 25p each

as at 30 June 2021

66,808,509

16,722

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, maximum gearing during the course of the year was 14.98% and was 11.37% at 30 June 2021.

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.

The capital of the Company is managed in accordance with its investment policy detailed in the Strategic Review above.

14 Net Asset Value per Ordinary Share

The net asset value per ordinary share is based on net assets of £115,319,000 (2020: £65,977,000) and on 66,888,509 (2020: 66,888,509) ordinary shares, being the number of ordinary shares in issue at the year end.

15 Reconciliation of Net Return before Finance Costs and Taxation,
to Net Cash Inflow from Operating Activities

	2021 £'000	2020 £'000
Net return before finance costs and taxation	53,401	(7,749)
(Gains)/losses on investments	(52,048)	9,524
Effective yield	-	58
Withholding tax suffered	(153)	(146)
Decrease in accrued income	102	132
Increase in other debtors	(1)	(5)
Increase in other creditors	130	26
Exchange losses	25	9
Net cash inflow from operating activities	1,456	1,849

16 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 cash equivalent and other payables is represented by their carrying value in the Balance Sheet shown above. 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 re-payment of a loan or that the Company may not be able to quickly liquidate its investments.

The Company held the following categories of financial instruments as at 30 June 2021:		2020 £'000
	2021 £'000	2020 £'000
Financial assets
Investment portfolio	129,353	76,916
Cash at bank and on deposit	2,887	1,027
Amounts due from brokers	136	-
Accrued income	164	266
Other debtors	175	136
Financial liabilities
Loan	16,000	12,000
Amounts due to brokers	897	-
Other creditors	336	205

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 above.

If the investment portfolio valuation fell by 5% at 30 June 2021 (10 per cent 2020), the impact on the profit or loss and the net asset value would have been negative £6.5million (2020: negative £7.7 million). If the investment portfolio valuation rose by 10 per cent the impact would have been 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.

10% sensitivity has been selected as this level of change is considered to be reasonable based on observations of current market conditions.

Interest rate risk

Financial assets

Bond 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.

Returns from bonds and preference shares 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 to 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 had increased by 0.5 per cent, the impact on the profit or loss would have been a loss of £66,000 (2020: £55,000). If the bank base rate had decreased by 0.5 per cent, the impact on the profit or loss would have been 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 the bank facility to meet any liabilities due. The Company has borrowed in sterling at a variable rate based on the UK bank base 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 has fixed interest liabilities. The fixed interest liabilities are disclosed in note 12.

	2021	2021 Weighted average interest	2021 Weighted Average period for which the rate is fixed	2020	2020 Weighted Average interest	2020 Weighted average period for which the rate is fixed
	£'000	rate (%)*	(years)	£'000	rate(%)*	(years)
Assets:
Fixed income and convertible securities	7,770	8.4	5.0	9,886	8.5	5.9
Preference shares	5,652	9.6	n/a	5,430	4.5	n/a

* 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 pounds 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.

Foreign currency exposure at 30 June 2021 was as follows:

30 June 2021	Investments £'000	Cash £'000	Net current assets £'000	Total £'000	Sensitivity Impact +5% -5% £'000 £'000
Canadian Dollar	64,221	5	4	64,230	3,212	(3,212)
US Dollar	12,877	59	197	13,133	657	(657)
Australian Dollar	30,310	815	(795)	30,330	1,517	(1,517)
Norwegian Krone	7,530	70	-	7,600	380	(380)
European Euro	3,752	21	115	3,888	194	(194)
Brazilian Real	-	5	-	5	-	-
	118,690	975	(479)	119,186	5,960	(5,960)
30 June 2020			Net		Sensitivity
			current		Impact
	Investments	Cash	assets	Total	+5%	-5%
	£'000	£'000	£'000	£'000	£'000	£'000
Canadian Dollar	31,002	4	-	31,006	1,550	(1,550)
US Dollar	11,675	33	242	11,950	598	(598)
Australian Dollar	17,396	1	-	17,397	870	(870)
Norwegian Krone	4,788	1	-	4,789	239	(239)
European Euro	2,912	20	92	3,024	151	(151)
Brazilian Real	-	15	-	15	1	(1)
	67,773	74	334	68,181	3,409	(3,409)

If the value of the currencies had strengthened against the pound in the portfolio by 5 per cent, the impact on the profit or loss and the net asset value would have been negative £6.0 million (2020: negative £3.4 million). If the value of sterling had strengthened by the same amount the effect would have been equal and opposite. 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.

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:
	2021	2020
	£'000	£'000
Fixed interest investments	7,770	9,886
Cash and cash equivalents	2,887	1,027
Balances due from brokers	136	-
Interest, dividends and other receivables	339	402
	11,132	11,315

Credit risk on fixed interest investments is considered to be part of market price risk. As at 30 June 2021 and as at 25 October 2021 there were no debtors that were past due.

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.

BNP Paribas is rated A+ by Standard & Poor's (04/2021, AA- by Fitch (10/2020) and Aa3 rated by Moody's (12/2020)

There were no significant concentrations of credit risk to counterparties as at 30 June 2021 and as at 30 June 2020. No individual investment exceeded 8.2 per cent of net assets as at 30 June 2021 (2020: 9.6 per cent).

As at 30 June 2021, for equity investments representing >1% of the total investments, the Company held 3 per cent or more of issued share capital of the following companies:

	Value per CQS £	Percentage held
REA Holdings 9% 31/12/49	4,039	6.84%
Odyssey Energy Solutions	2,112	5.08%
Ascendant Resources Inc	1,638	11.91%
Paladium One Mining	1,418	3.59%

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:

30 June 2021	Three months or less £'000	More than three months but less than one year £'000	More than one year £'000	Total £'000
Current liabilities	1,233	-	163	1,396
Loan	16,000	-	-	16,000
	17,233	-	163	17,396
30 June 2020		More than three
	Three months	months but less	More than
	or less	than one year	one year	Total
	£'000	£'000	£'000	£'000
Current liabilities	205	_	163	368
Loan	12,000	-	-	12,000
	12,205	-	163	12,368

17 Related Party Transactions

The following are considered related parties: the Board of Directors ('the Board') and CQS/New City Investment Managers ('the Investment Manager').

Details of the fee arrangement with the Investment Manager is included within the Directors' Report under the heading Management and Management Fees and is disclosed 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 above, 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 above.

The balance due to Directors for fees at the year end was £16,000 (2020: £14,000).

18 Subsequent Events

The Board has evaluated subsequent events for the Company through to 25 October 2021, the date the financial statements were available to be issued, and has concluded that the material events listed below do not require adjustment of the financial statements.

Dividend declaration

The fourth interim dividend of 1.82 pence per share was announced on 14 July 2021 and paid on 31 August 2021 to Shareholders on the register on 30 July 2021, having an ex-dividend date of 29 July 2021.

Bank loan amendment

In advance of LIBOR ceasing to be published on 31 December 2021, the Company signed an amendment agreement with Scotiabank on 17 September 2021 that changes the benchmark reference rate from LIBOR to SONIA (or similar alternative reference rates for drawdowns in other permitted currencies).

Glossary of Terms and Definitions

Gearing - Total assets (as below) less all cash (including UK Treasury Stock) divided by shareholders' funds.

Asset Cover - The value of a company's net assets available to repay a certain security. Asset cover is usually expressed as a multiple and calculated by dividing the net assets available by the amount required to repay the specific security.

Discount/Premium -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.

Dividend Cover - Earnings per share (per the revenue column) divided by dividends per share expressed as a ratio.

Dividend Yield -The annual dividend expressed as a percentage of the share price.

Net Asset Value or NAV - The value of total assets less liabilities. Liabilities for this purpose included current and long-term liabilities. To calculate the net asset value per Ordinary share the net asset value is divided by the number of shares in issue.

Ongoing Charges Ratio - 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.

Price/Earnings Ratio - The ratio is calculated by dividing the middle-market price per share by the earnings per share.

The calculation assumes no change in earnings but in practice the multiple reflects the stock market's view of a company's prospects and profit growth potential.

Prior Charges - The name given to all borrowings including debentures, loan and short term loans and overdrafts that are to be used for investment purposes, reciprocal foreign currency loans, currency facilities to the extent that they are drawn down, index-linked securities, and all types of preference or preferred capital and the income shares of split capital trusts, irrespective of the time until repayment.

Redemption Yield - The measure of the annualised total return on the current price of a security up to the date of its repayment. The calculation is based on aggregated income and capital returns, no account being taken of taxation.

Total Assets - Total assets less current liabilities (excluding prior charges as defined above).

Total Return - Total return involves reinvesting the net dividend in the month that the share price goes xd. The NAV total return involves investing the same net dividend in the NAV of the trust on the date to which that dividend was earned, eg quarter end, half year or year end date.

Report of the UK Investment Adviser Relating to Matters under the Alternative Investment Fund Managers' Directive

For the year ended 30 June 2021

CQS Natural Resources Growth and Income plc

Report of the UK Investment Adviser Relating to Matters under the Alternative Investment Fund Managers' Directive.

Risk management systems

The Company's Offering Memorandum sets out the risks to which the Company is exposed. The UK Investment Adviser employs risk management disciplines which monitor the Company's portfolio and to quantify and manage the associated market and other risks. A permanent independent department has been established by the UK Investment Adviser to perform the risk management function. The risk management and performance analysis team ("RMPA") is led by the Chief Risk Officer and is functionally and hierarchically separate from the operating units of the portfolio managers of the Company.

RMPA is a dedicated control function over the operating units of the Investment Adviser and is not involved in the performance activities of the Company. RMPA has designed, documented and implemented effective risk management policies, processes and procedures in order to identify, quantify, analyse, monitor, report on and manage all material risks relevant to the Company's investment strategy. The systems include third party vendor applications such as Tradar, Sungard Front Arena and MSCI Risk Metrics, complemented with a number of proprietary applications.

Material changes to information required to be made available to investors of the Company

No material changes.

Assets of the Company subject to special arrangements arising from their illiquid nature

There are no assets of the Company which are subject to special arrangements arising from their illiquid nature.

Remuneration

The AIFM has adopted a remuneration policy which meets the requirements of the Directive and has been in place for the current financial year of the Company. The variable remuneration period of the AIFM ended on 31 December 2020 and therefore does not coincide with the financial year of the Company.

The remuneration process is overseen by the remuneration committee (comprised predominately of independent non-executive parties). An internal working group encompassing senior management is responsible for gathering relevant information (both quantitative and qualitative) to evaluate the performance (both short and long term) of individuals, teams and the AIFM as a whole, against external market benchmarks and to utilise this to develop proposals for fixed and variable remuneration for all staff. The remuneration committee receives these proposals and the supporting information and is responsible for independently reviewing and scrutinising the proposals and evidence provided in line with the AIFM's stated objectives and developing its final recommendations for delivery to the governing body of the AIFM and other entities associated with the AIFM.

The variable remuneration of all staff in excess of a threshold, which includes those individuals categorised as remuneration code staff ("code staff"), is subject to the following:

•deferred payment of up to 50% of the variable remuneration for a period of 3 years;

•deferred remuneration is linked to funds managed by the AIFM;

•the breaching of certain covenants may lead to forfeiture of deferred remuneration; and

•a claw-back provision of deferred remuneration in certain circumstances including future performance issues by the individuals. The below information provides the total remuneration paid by the AIFM (and any delegates) for the year ending, December 31, 2020. This has been presented in line with the information available to the Company. There is no allocation made by the AIFM to each AIF and as such the disclosure reflects the remuneration paid to individuals who are partly or fully involved in the AIF, as well as staff of any delegate to which the firm has delegated portfolio management and/or risk management responsibilities in relation to the AIF.

Of the total AIFM remuneration paid of $92.9 for the year ending December 31, 2020 to 248 individuals (full time equivalent), $34.5m has been paid as fixed remuneration determined based upon the FCA guidance with the remainder being paid as variable remuneration.

The AIFM has assessed the members of staff whom it determines to be code staff in line with AIFMD as reflected in SYSC 19b.3.4R. Senior management and staff engaged in the control functions are identified based upon their roles and responsibilities within the AIFM and the delegates. With respect to investment professionals, in determining whether such staff are code staff, due consideration is taken of the allocated capital and trading limits that apply to the funds managed and whether the individuals report into and seek consent for investment decisions from others who are themselves code staff. There are 16.6 individuals (full time equivalent) who meet this definition and these individuals have collectively been compensated $45.1m.

Not all individuals are directly remunerated by the AIFM due to the structure of the AIFM entity, however in the interests of meeting the underlying requirement of this disclosure all staff involved have been assessed as if directly remunerated by the AIFM.

A copy of the Company's Annual Report will be available shortly from the Company Secretary, (BNP Paribas Securities Services S.C.A., Jersey Branch, IFC 1, The Esplanade, St Helier, Jersey, JE1 4BP), or will be circulated on the Company's website (NCIM - City Natural Resources High Yield Trust - Fund Page).

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END

FR EALEXALDFFFA

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CQS Natural Resources Growth and Income (CYN)

Tuesday, 26th November 2024

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