16th Sep 2015 09:59
LONDON (Alliance News) - City Natural Resources High Yield Trust PLC on Wednesday said it saw relative stability in the second half of its last financial year after a tough first six months to the year as oil prices halved, although it has since suffered from further commodities pressure.
The trust said its net asset value was 121.7 pence per share at the end of June, giving a NAV total return for the financial year of negative 20.9%, while its benchmark index fell 14.5%.
"Unfortunately July and August saw a resumption of the commodity market retreat, exacerbating what was already a disappointing period of performance," Chairman Geoff Burns said in a statement.
Since June 30, the trust's net asset value has fallen a further 18%, standing at 99.4p at the time the chairman wrote his statement, down some 75% since its peak in December 2010.
Burns said there has been a "continuation of the veritable bloodbath that the last five years has represented for this sector".
"What is certain, is that over the medium term the case for your company remains as compelling as ever, with world population growth and increasing urbanisation underpinning a demand for commodities that can only expand," Burns said.
"The current period of financial retrenchment at producing companies and virtual abandonment of exploration projects, combined with the supply constraints that threaten all but bulk commodities, will make the recovery even more dramatic when it does arrive," Burns said.
"However, while it is tempting to call the bottom of this part of the commodity cycle, your company continues to be as risk balanced as is possible given the constraints of our mandate, asset class and balance sheet," the chairman added.
Shares in the trust were up 2.7% at 86.25 pence on Wednesday morning.
By Samuel Agini; [email protected]; @samuelagini
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