City Natural Resources has published interims for the six months ended 31 December 2015. The Chairman’s statement opens thus: “It is five years since I last wrote to you with unqualified good news and I am very much afraid that the six months under review continues what has been a dismal run, with no let-up in the commodity sector bloodbath.”
Over the period the net asset value total return was -17.9 per cent. The benchmark index returned -20.7 per cent. The Company’s ordinary share price total return of -9.7 per cent for the six months was better than the net asset value total return, reflecting a narrowing in the discount at which the Company’s shares trade from 22.1 per cent to 14.6 per cent during the period.
Two interim dividends of 0.86 pence per share have been paid in respect of this year, the same level as those paid last year. Earnings per share declined from 3.09 pence to 2.79 pence over the six months to 31 December 2015, in part reflecting a less defensive portfolio bias and increased investment into low cost miners. Last year’s dividend was covered, and the Board expects a solid income performance during the year to 30 June 2016. Should the current dividend level not be covered by earnings, however, the Board says it has no qualms about utilising revenue reserves to maintain current dividend levels so long as longer term income generation is deemed safe. They stress that these reserves have been built up for the very purpose of smoothing lumpiness in the underlying income generation.
There barely any mention of individual companies in the managers’ report.
CYN : City Natural Resources benefits from narrowing discount