Dissemination of
a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR).
11 July
2017
CRYSTAL AMBER FUND LIMITED
(“Crystal Amber Fund” or the
“Fund”)
Monthly Net Asset
Value and Interim Dividend Declaration
Crystal Amber Fund announces that its unaudited net asset value
(“NAV”) per share at 30 June 2017 was
204.37 pence (31 May 2017: 227.46
pence per share).
The proportion of the Fund’s NAV at 30
June 2017 represented by the ten largest holdings, other
investments and cash (including accruals), was as follows:
Top ten holdings |
Pence per share |
Percentage of investee
equity held |
Hurricane Energy
plc |
49.6 |
12.2% |
Northgate plc |
29.5 |
4.9% |
STV Group plc |
25.7 |
16.8% |
Fair FX Group plc |
16.0 |
25.9% |
Leaf Clean Energy
Co. |
12.9 |
29.9% |
NCC Group plc |
11.6 |
2.5% |
Ocado Group plc |
9.6 |
0.5% |
GI Dynamics Inc |
9.4 |
46.1% |
Sutton Harbour
Holdings plc |
7.5 |
29.3% |
Johnston Press
plc |
3.3 |
21.4% |
Total of ten largest
holdings |
175.1 |
|
Other investments |
26.8 |
|
Cash and accruals |
2.5 |
|
Total NAV |
204.4 |
|
Investment Adviser’s commentary on the
portfolio
Over the quarter to 30 June 2017,
NAV per share decreased by 15.4 per cent. Over the year to
30 June 2017, NAV per share increased
by 32.9 per cent. Including the two dividends paid, NAV total
return was 36.1 per cent.
The top three positive contributors to NAV growth over the
quarter to 30 June 2017 were Fair FX
Group plc (1.0%), Grainger plc (1.0%) and NCC Group plc (0.9%). Top
detractors were Hurricane Energy plc (-14.8%), Northgate plc
(-2.8%) and Johnston Press plc (-0.6%).
Hurricane Energy plc (“Hurricane”)
At the end of the quarter, Hurricane announced that it had
raised $530 million of funding for
the development of the Early Production System (EPS) at its
Lancaster field. This comprised $300
million of new equity at 32p and $230
million of secured debt in the form of a convertible loan
note. As a result, the company is targeting first oil from the EPS
in 2019.
This followed a warrant issue on 12 May
2017, which raised £12.7 million for working capital
purposes and the publication on 8 May
2017 of its updated Competent Person’s Report (CPR) on
Lancaster. Factoring in the appraisal results over the last four
years, the CPR raised the recoverable oil volume estimate from 207
million barrels to 523 million barrels. The Fund believes that
Hurricane holds a very large, quality asset, with a resource
potentially in excess of 1.6 billion barrels of oil.
In April 2017, the Fund commented
that during the previous quarter it reduced its position into
demand to manage its exposure to this successful investment. Over
the quarter, Hurricane’s share price decreased by 42.7 per cent. We
regard the principal cause of this substantial derating to be the
mismanagement of the warrant issue. On 23
June 2017, the Fund released an announcement, expressing its
disappointment at Hurricane’s poor handling of the warrant issue
and comments made at its AGM on 7 June
2017, which referred to the near-term focus being on funding
and delivering the EPS. Since the quarter end, the Fund has written
to the company expressing its concerns. The Fund also strongly
believes that the way the company has gone about the recent
fundraisings has created a significant disconnect between the
operational value of Hurricane and its strategic value.
GI Dynamics Inc (“GI Dynamics”)
On 3 May 2017, GI Dynamics
announced that it had selected Allenby Capital to explore the
option of a London AIM listing, which the Fund believes would be a
positive step to increase the company’s investor profile in its
main European markets. On 18 May
2017, GI Dynamics announced the suspension of its CE Mark
approval due to non-conformity with internal regulatory procedures.
Additional research released over the quarter continues to support
the safety and efficacy of the device. Of note, a
meta-analysis presented at the Digestive Disease Week meeting
reviewed all clinical trials and confirmed improved glycaemic
control and weight loss in patients.
In June 2017, the Fund was pleased
to subscribe to a $5 million
convertible note so that GI Dynamics is able to fully capitalise on
its growth potential.
Over the quarter, GI Dynamics’ share price decreased by 11.4 per
cent. The Fund continues to work closely with the management
of GI Dynamics to optimise its strategy and realise shareholder
value.
On 29 June 2017, Scott Schorer, CEO of GI Dynamics, presented at
Crystal Amber’s Investor Conference. His presentation is available
at: http://crystalamber.com/press#699
FairFX Group plc (“FairFX”)
During the quarter, FairFX published its final results for the
year ended 31 December 2016,
reporting strong revenue growth in the second half of 2016, with
positive momentum continuing into 1Q2017. Highlights included
a 27.9 per cent. rise in currency transactions in 2016, compared to
2015, and a 49.2 per cent. increase in international payments
turnover year-on-year. We expect to see continued revenue
growth as the company focuses on higher margin areas of the
business, particularly in the corporate division.
On 19 May 2017, FairFX announced
that it had signed a partnership agreement with online foreign
exchange boutique, easyCurrency, which will see FairFX offer
currency cards, cash and international payments services to
easyGroup customers through easyCurrency.com. This
partnership will simplify the process of foreign exchange for
easyCurrency customers and will open up new revenue streams for
FairFX. The deal reinforces the Fund’s view that FairFX is a
market leader in this high growth market.
Over the quarter, FairFX’s share price increased by 16.7 per
cent. After the quarter end, Fair FX announced that it was
trading ahead of management expectations. The share price trades on
15 times prospective earnings for 2018 and less than 9 times
prospective earnings for 2019.
On 29 June 2017, Ian Strafford-Taylor, CEO of FairFX presented at
Crystal Amber’s Investor Conference. His presentation is available
at: http://crystalamber.com/press#698
Grainger plc (“Grainger”)
During the quarter, the Fund exited its position in Grainger,
the UK’s largest listed residential landlord, following a
significant share price re-rating, which saw its discount to net
assets narrow from 17.1 per cent. at 31
December 2016 to 8.5 per cent. in June 2017. The Fund acquired its 3.4 per cent.
shareholding in Grainger in the summer of 2015 at a cost of £31.2
million. The Fund is pleased that following engagement, as
requested by the Fund, Grainger undertook a strategic review,
streamlined the business, reduced its administrative and other
expenses from £42 million a year to £27.5 million a year and
reduced its cost of debt from 5.3 per cent. to 3.6 per cent. The
Fund realised total sale proceeds of £37.3 million and together
with dividends received, generated a profit of £7.1 million on this
successful investment.
Ocado Group plc (“Ocado”)
During the quarter, the Fund initiated an investment in Ocado.
The Fund believes that the company’s Smart Platform potential is
not reflected in the current valuation. This end-to-end operating
solution for online grocery retail is based on proprietary
technology and IP developed over fifteen years. It is suitable for
its own business and those of commercial partners around the world
facing the threat of Amazon and limited ability or time to develop
a solution in-house. The Fund believes this scalable technology
platform can generate substantial free cash flows.
On 4 June 2017, Ocado announced
its first international deal with a regional European retailer. In
June 2017, the Investment Adviser met
with and held constructive discussions with Ocado’s senior
management. The Fund looks forward to supporting Ocado.
Dividend
The Board has declared an interim dividend of 2.5p per ordinary
share in respect of the year ended 30 June
2017. The dividend will be paid on 18
August 2017 to shareholders on the register on 21 July 2017 (the record date). The shares
will be quoted ex-dividend on 20 July
2017.
For further enquiries please contact:
Crystal Amber Fund Limited
William Collins (Chairman)
Tel: 01481 716 000
www.crystalamber.com
Allenby Capital Limited - Nominated Adviser
David Worlidge/James Thomas
Tel: 020 3328 5656
Winterflood Investment Trusts - Broker
Joe Winkley/Neil Langford
Tel: 020 3100 0160
Crystal Amber Advisers (UK) LLP – Investment Adviser
Richard Bernstein
Tel: 020 7478 9080