RNS Number : 9073T
Crystal Amber Fund Limited
23 July 2020
23 July 2020
CRYSTAL AMBER FUND LIMITED
("Crystal Amber Fund" or the "Fund")
Monthly Net Asset Value
Crystal Amber Fund announces that its unaudited net asset value
("NAV") per share at 30 June 2020 was 106.02 pence (31 May 2020:
91.20 pence per share).
The proportion of the Fund's NAV at 30 June 2020 represented by
the ten largest shareholdings, other investments and cash
(including accruals), was as follows:
Ten largest shareholdings Pence per share Percentage of investee equity
------------------------------------ ---------------- ------------------------------
De La Rue plc 26.5 18.3%
Allied Minds plc 19.7 22.5%
Equals Group plc 12.1 21.4%
Redde Northgate plc 8.8 2.0%
Hurricane Energy plc 8.2 6.6%
*Board Intelligence Ltd 6.9 *
Camellia plc 2.3 1.1%
Sutton Harbour Group plc 2.2 10.8%
GI Dynamics Inc. 1.6 73.1%
Kenmare Resources 1.3 0.6%
Total of ten largest shareholdings 89.6
Other investments 7.3
Cash and accruals 9.1
Total NAV 106.0
*Board Intelligence Ltd is a private company and its shares are
not listed on a stock exchange. Therefore, the percentage held is
Investment adviser's commentary on the portfolio
Over the quarter to 30 June 2020, NAV per share grew by 18.3%.
Over the year to 30 June 2020, adjusting for the two dividends paid
in the period, NAV per share fell by 55.4%.
The top three positive contributors to the quarterly NAV
movement were De la Rue (17.3%), Allied Minds (4.9%) and Equals
Group (3.2%). The top two detractors were Hurricane Energy plc
(-7.3%) and GI Dynamics (-3.3%).
De La Rue plc ("De la Rue")
During the quarter, De La Rue announced a GBP100 million equity
fundraise and released its results for the year ended March 2020
along with further detail about the new management team's
turnaround plan. The Serious Fraud Office announced the closure of
its investigation into De La Rue, first made public in July
The results announcement made clear that underlying demand for
De La Rue's key products and services, in both the Currency and
Authentication divisions, has remained strong throughout the period
when the broader economy has been adversely affected by the
coronavirus pandemic. Indeed, the company has identified new areas
of opportunity in this environment, such as the authentication of
COVID-19 protection kits and the development of its own proprietary
immunity certification scheme, with the company recently confirming
that it is in discussions with governments to sell these solutions.
Between the start of its new financial year in April and the
results announcement on 17 June, the Authentication division won
contracts with a combined lifetime value above GBP100m.
De La Rue was able to deleverage materially during the second
half of its year. This was due to completion of the sale of its
International Identity Solutions business, combined with a stronger
underlying free cash flow performance than in the first half. Its
pension scheme also moved into a position of accounting surplus
during the second half: GBP65 million at the end of March.
Notwithstanding these positive developments, an equity fundraise
was ultimately required as a direct consequence of the "material
uncertainty" noted in the interim results released in November
2019, which had resulted from what we consider to be poor
management by the previous leadership team. Whilst the scale of the
fundraise has arguably left the company with an under-geared
balance sheet, it has resulted in several positive developments
including an improved pension funding schedule, an extension of its
financing facilities until December 2023 and, most significantly, a
fully funded three-year turnaround plan.
The Fund is pleased to note that, by exposing and highlighting
the failures of prior management, it accelerated the departures of
the former Chief Executive and Chairman and enabled the new
leadership to take decisive actions to maximise growth
opportunities in both Currency and Authentication and to remove
excess cost from the business.
De La Rue has now emerged with an almost debt-free balance
sheet. It still enjoys a 30% global market share in banknote
printing, which positions the Currency division to accelerate and
fully capitalise on the structural shift towards polymer notes. The
higher-margin Authentication business is growing rapidly.
The Fund believes that De La Rue's current valuation of less
than one times revenue reflects neither the operational upside made
clear in the detailed disclosure of the three-year turnaround plan,
nor its strategic value when compared to previous deals within the
sector priced at around two times expected revenue.
Over the quarter, De La Rue's share price increased by 149%,
adjusted for the open offer priced at 110p per share.
GI Dynamics Inc ("GI Dynamics")
COVID-19 has placed the need to tackle obesity and diabetes at
the top of the public health agenda. These two conditions are key
contributors to mortality outcomes in Covid-19 patients. Both
remain poorly treated by pharmacotherapy and invasive bariatric
surgery. GI Dynamics brings a treatment with a wealth of data
confirming efficacy and safety.
Over the period, the company initiated steps to delist from the
Australian Stock Exchange, which was completed earlier this month.
A private company set-up will be more appropriate to GI Dynamics'
stage of development, as it pursues its key goals: CE Mark
accreditation and the US clinical trial.
After the period-end, the Fund converted its 2017 senior secured
loan note into equity. The combined principal and accrued interest
of USD5.4 million has converted at the 5-day volume weighted
average price. This, together with the delisting, should simplify
the company's corporate structure and reduce the company's cost
Hurricane Energy plc ("Hurricane")
Over the period, the company's Early Production System ("EPS")
experienced an increased water cut. In one of its two wells, the
7z, production became unstable and had to be suspended. As a
result, the company suspended its production guidance for 2020 of
17,000 net barrels per day for the year. Shares sold off as
investors contemplated the potential impact on redeeming the $230
million convertible loan note in July 2022, in the context of
capital projects over the next two years that may be required by
The EPS's electrical pumps have since been commissioned.
Production has restarted on the 7z and combined production from
both wells is now at 15,000 barrels per day. Production for the
first and second quarters was at 14,900 and 14,300 barrels per day
respectively. A number of remediation options are available to
increase the EPS' production to the target 20,000 barrels per
Hurricane replaced its Chief Executive in June. The company is
now undertaking a reassessment of its reservoir model. This
technical work is expected to take three months and conclude in
time for the company's interim results in September. A potential
outcome has been flagged: a shallower oil-water contact, which
could explain the increased water cut. Whilst this would reduce the
size of the reservoir, it would also eliminate the case for the
commitment wells. This should reduce capital expenses and allow the
company to focus on optimising the EPS.
Over the quarter Hurricane's share price fell by 45.4%.
In previous years, during July, the Fund has declared an interim
dividend of 2.5p per share. Over the last five years, the Fund has
paid dividends totalling 25p per share. Traditionally, these
dividend declarations have been largely funded by dividends
received from portfolio companies.
In view of the effects of COVID-19, there is currently
uncertainty as to the timing and quantum of dividend receipts. The
directors are also mindful that the composition of the portfolio is
likely to produce lower dividend receipts than in the past.
Accordingly, the directors have concluded that a decision on the
interim dividend should be deferred until later in the year.
Transactions in Own Shares
During the quarter, the Fund bought back a total of 683,000 of
its own ordinary shares at an average price of 73.99p per share as
part of its buyback programme.
For further enquiries please contact:
Crystal Amber Fund Limited
Chris Waldron (Chairman)
Tel: 01481 742 742
Allenby Capital Limited - Nominated Adviser
David Worlidge/Liz Kirchner
Tel: 020 3328 5656
Winterflood Investment Trusts - Broker
Joe Winkley/Neil Langford
Tel: 020 3100 0160
Crystal Amber Advisers (UK) LLP - Investment Adviser
Tel: 020 7478 9080
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact firstname.lastname@example.org or visit www.rns.com.
(END) Dow Jones Newswires
July 23, 2020 06:29 ET (10:29 GMT)
Crystal Amber (LSE:CRS)
Historical Stock Chart
From Sep 2020 to Oct 2020
Crystal Amber (LSE:CRS)
Historical Stock Chart
From Oct 2019 to Oct 2020