28 March 2017
Crystal Amber Fund
Limited
Interim Results
for the period ended 31 December
2016
The Company announces its interim results for the six months
ended 31 December 2016.
Highlights
- NAV(1) per share increased 41.8 per cent. over the
six-month period to 218.02 pence
(153.79 pence per share at
30 June 2016). Including the
dividends paid, NAV total return per share over the six months
ended 31 December 2016 was 45.0 per
cent..
- Net realised gains over the six months to 31 December 2016 were £3.9 million.
- Dividends of 2.5 pence per share
were paid in August 2016 and
January 2017, in line with the
dividend policy announced in December
2014.
- Continued engagement with the Fund’s main investee companies,
particularly Hurricane Energy plc (“Hurricane”), Grainger plc
(“Grainger”) and Northgate plc (“Northgate”), all three of which
made significant contributions to NAV.
- Hurricane announced several positive drilling results from its
wells in the West of Shetlands area, which resulted in a share
price increase of 192.6 per cent. over the Period.
William
Collins, Chairman of the Company, commented:
“In the six months to 31 December 2016, the Fund’s performance was
strong as it continued to deliver on its activist investment
strategy. The return of 45.0 per cent. over the Period, made
Crystal Amber the best performing UK
fund included within Trustnet’s 110 Investment Trusts. During a
period of political uncertainty, the Fund continued its bottom up
approach, focusing on special situations where it sees the
potential to act as a catalyst for change.”
For further enquiries please contact:
Crystal Amber Fund Limited |
|
William Collins (Chairman) |
Tel: 01481 716 000 |
|
|
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 |
(1) All capitalised terms
are defined in the Glossary of Capitalised Defined Terms unless
separately defined.
Chairman’s
Statement
I hereby present the interim results of the Company for the six
months to 31 December 2016.
Over the Period, NAV per share increased 41.8 per cent. to an
unaudited 218.02 pence per share
(153.79 pence per share at
30 June 2016). Total return over the
Period, including the dividends paid, was 45.0 per cent.. This
compares with a total return of 12.0 per cent. for the FTSE All
Share Index and 16.7 per cent. for the Numis Smaller Companies
Index. Over the 2016 calendar year, the Fund’s total return was
44.7 per cent., which compares to a total return of 16.8 per cent.
for the FTSE All Share and 12.8 per cent. for the Numis Smaller
Companies Index.
During the Period, the UK economy faced times of political
uncertainty and instability, with the UK vote in favour of “Brexit”
and Donald Trump’s victory in the US presidential elections.
However, despite these developments, US and UK equity markets
performed strongly over the Period and the FTSE 100 ended the
calendar year at a record high.
In August 2016, the Bank of
England cut interest rates from
0.5 to 0.25 per cent. and committed a further £100 billion of
quantitative easing to reduce the likelihood of the UK slipping
into a recession. Sterling’s depreciation contributed to
strong returns in UK equity markets during the Period. The Fund
believes this currency weakness makes UK companies more attractive
to overseas buyers and is leading to an increase in
takeovers.
The Fund continues to purchase FTSE put options as insurance
against a significant market sell-off. The net cost of these
options amounted to 3.6 per cent. of NAV over the Period.
The discount management policy continued, with a further 160,000
shares purchased into Treasury at an average cost of 157.7 pence, and at an average discount to NAV at
the time of purchase of 4.5 per cent.. As at 31 December 2016, the Fund’s closing share price
traded at a discount to NAV of 7.6 per cent..
In keeping with the Fund’s dividend policy of paying
5 pence per year, a dividend of
2.5 pence per share in respect of the
six months ended 30 June 2016 was
paid on 19 August 2016 and an interim
dividend of 2.5 pence per share in
respect of the six months ended 31 December
2016 was paid on 19 January 2017. Based on the NAV at
31 December 2016, this represents a
yield of approximately 2.3 per cent..
In conclusion, I am pleased to report strong performance, both
in absolute and relative terms, over the Period and the Board is
confident of positive outcomes from recent and current engagement
with our principal investee companies.
William
Collins
Chairman
27 March 2017
Investment
Manager’s Report
Strategy and Performance
During the Period, the Fund continued to engage closely with the
management and boards of its major holdings.
At 31 December 2016, investments
in equities represented 103.3 per cent. of net assets. Net
debt and accruals were £7.1 million, of which £2.5 million was for
the interim dividend announced on 14
December 2016.
The table below lists the top ten holdings at 31 December 2016, with the performance
contribution of each during the six-month period. The main
positive contributions came from Hurricane (35.5 per cent.),
Northgate (6.3 per cent.) and Grainger (2.7 per cent.). The
main negative contribution was from Sutton Harbour Holdings plc
(“Sutton Harbour”) (-0.2 per cent.).
Net realised gains for the Period were £3.9 million. This
compares with £2.9 million for the six months ended 31 December
2015.
Portfolio
Top ten
holdings |
Pence per
share |
Percentage of
investee equity held |
Total return over
the Period |
Contribution to NAV
performance |
Hurricane Energy
plc |
85.9 |
14.1% |
193.2% |
35.5% |
Grainger plc |
34.3 |
3.4% |
13.8% |
2.7% |
Northgate plc |
31.7 |
4.7% |
57.0% |
6.3% |
STV Group plc |
19.9 |
13.9% |
18.9% |
0.6% |
Leaf Clean Energy
Company |
12.6 |
29.9% |
2.9% |
0.5% |
FairFX Group plc |
8.8 |
25.5% |
7.9% |
0.5% |
Sutton Harbour
Holdings plc |
7.5 |
29.3% |
(5.4)% |
(0.2)% |
Hansard Global
plc |
4.7 |
3.3% |
6.2% |
0.1% |
Camellia plc |
2.6 |
0.9% |
37.3% |
0.4% |
Shepherd Neame
Ltd |
2.5 |
1.3% |
13.3% |
0.2% |
Total of ten largest
holdings |
210.5 |
|
|
|
Other investments |
14.6 |
|
|
|
Cash and accruals |
(7.1) |
|
|
|
Total NAV |
218.0 |
|
|
|
Investee Companies
Our comments on a number of our principal investments are as
follows;
Hurricane
Hurricane is an oil exploration company targeting naturally
fractured basement rock reservoirs in the West of Shetlands
area. Its core oil fields are Lancaster, Halifax, Lincoln and Warwick. The Fund initially
invested in Hurricane in 2013.
Drilling results reinforce the Fund’s view that Hurricane has a
significant resource base, potentially in excess of one billion
barrels of oil. The oil price recovered in 2016, resulting in
improved market sentiment towards the sector.
On 9 September 2016, Hurricane
announced positive drilling results at its Lancaster well, indicating contingent
resources materially higher than previous estimates of 200 million
barrels. In October 2016, the
company announced flow rates 50 per cent. higher than the previous
horizontal well. Following these results, Hurricane raised
£70 million to fund the drilling of two additional exploration
wells, the acquisition of sub-sea equipment and engineering studies
for the Early Production System phase of the Lancaster development. As part of this
deal, the Fund invested a further £10.7 million in Hurricane.
In November 2016, Hurricane was
awarded an adjacent new licence, Halifax. By drilling
Halifax and Lincoln, the company expects to determine how
far the field extends in the Greater Lancaster Area.
On 19 December 2016, Hurricane
announced positive interim results at its Lincoln exploration well.
We currently await more detailed results from the Halifax and Lincoln wells, as well as the updated
Competent Person’s Report for Lancaster. A Competent Person’s
Report is a technical report intended to provide an unbiased and
independent opinion on the technical aspects of an oil company or
specific oil field, with the ultimate purpose of informing
investors.
The Fund continues with its ongoing positive engagement with
Hurricane and supports the management’s strategy.
Grainger
Grainger is the UK’s largest listed residential landlord with a
portfolio of assets worth £2.7 billion. It owns over 3,600
regulated tenancy properties with a market value of £1.3
billion. As these properties become vacant and are sold,
Grainger estimates that they will generate a reversionary surplus
of £327 million for the company.
As there are no new regulated tenancies in the UK, Grainger aims
to focus growth efforts on the Private Rental Sector (“PRS”)
division of the business by investing £850 million in it by
2020. In its December 2016 full
year results, Grainger confirmed that it had secured £389 million
of this investment target. In these results it also announced
that its cost of debt has been reduced to 3.9 per cent..
Over the Period, the Fund continued to engage with Grainger’s
management on optimising capital structures and balance sheet
efficiency. Despite management’s commitment to simplifying,
refocusing and improving the efficiency of the business, at the
Period end Grainger’s shares traded at a 17.1 per cent. discount to
its net asset value of 287 pence per
share. This figure excludes the 78
pence per share reversionary surplus.
After the Period end, Grainger announced the retirement of its
Chairman, Baroness Margaret Ford,
who is to be replaced by Mark Clare,
the former CEO of Barratt Developments plc.
On 8 February 2017, Grainger
announced a positive trading update with solid progress in its PRS
division and welcomed the Government’s Housing White Paper, which
recognises the importance of rental properties in solving the
housing crisis. This should underpin Grainger’s strategy to invest
a total of £850 million into the PRS by 2020.
There remains a continuing opportunity to reduce Grainger’s
overhead, debt and tax costs and improve capital allocation. We
feel that there is still the potential to realise significant value
through either a spin-off of the regulated tenancy portfolio or
from the sale of the business.
Northgate
Northgate is the leading light commercial vehicle hire business
in the UK, Ireland and
Spain and has been supplying and
managing vehicles for over 35 years. It offers a flexible
rental product without a long-term commitment from the customer.
The company has a fleet of over 93,000 commercial vehicles,
available from more than 100 sites across the UK, Ireland and Spain. Customers can tailor rental contracts
to their requirements and retain some flexibility as their needs
evolve.
On 6 December 2016, Northgate
announced interim results in line with expectations. The company
had seen slightly weaker levels of vehicle hire in the UK, but
these had stabilised and were starting to increase. The
Spanish division saw continued growth.
Also in December 2016, Northgate
announced the departure of its CEO, Bob
Contreras, and the appointment of a new CEO, Kevin Bradshaw, former CEO of Wyevale Garden
Centres and UK CEO of Avis
Europe. The Fund welcomes this development: in
July 2016, the Fund announced that it
had written to the company setting out its assessment of the
company’s prospects with suggested actions, including a strategic
review to consider a potential sale of all or part of the
business.
During the Period, the Fund continued to increase its stake and
engaged with Northgate on ways to better capitalise on its brand,
market position and balance sheet strength. We maintain the view
that Northgate is a company with good prospects, trading at a
significant discount to the market, making it an attractive
acquisition target.
STV Group plc (“STV”)
STV is a media company that broadcasts free-to-air TV through
the Channel 3 licence in Scotland.
This channel is served by ITV in most of the UK.
In December 2016, STV announced a
settlement with its pension trustees that provides improved
visibility of the cash requirements of the business.
In March 2017, the company
reported its full year results, slightly ahead of consensus
expectations. Highlights included increasing the dividend by
50 per cent. to 15 pence per share
(equivalent to a 4 per cent. yield), which represents a payout of
70 per cent. of earnings after the pension contribution.
Advertising revenues were weaker in the final quarter of 2016, but
this was consistent with guidance from ITV.
STV is targeting 10 per cent. annual earnings per share growth
for the next three years, which we believe could be conservative
given the number of potential profit levers. The company owns
the rights to online revenues, so will benefit from online growth
as it provides a significantly higher incremental gross margin of
50 per cent. (the margin on terrestrial business is 20 per
cent.).
We maintain the view that the company could be an attractive
acquisition target.
Leaf Clean Energy Company (“Leaf”)
Leaf is an investment company focused on clean energy, largely
in North America.
The Fund continues to support the company’s realisation
strategy. Leaf is currently litigating with its largest
holding, Invenergy, seeking payment of $126
million (pre-tax). This equates to c.85 pence per Leaf share
(pre-tax), which compares to Leaf’s share price at the Period end
of 35.5 pence. We remain confident
that the litigation will be successful in due course and note that
whilst it is ongoing, assuming a successful outcome for Leaf, the
claim accrues interest at 6 per cent.. We feel that this adequately
compensates our position given the confidence we have in Leaf’s
case. We believe the company will be able to generate resources
needed to see through the litigation, from the orderly realisation
of other assets, thereby maximising the value of the legal case
against Invenergy.
FairFX Group plc (“FairFX”)
FairFX is an international payment services provider, offering
services to customers in the UK since 2007. It has developed a
payments platform that enables personal and business customers to
make easy, low-cost payments in a broad range of currencies and
countries and across a range of FX products via one integrated
system.
In September 2016, FairFX
announced interim results with strong growth in revenue and a more
profitable business mix. A switch to higher margin products
saw gross profit rise 30 per cent., three times faster than
turnover. Card and international payments products delivered strong
returns and the corporate card platform saw very strong
growth.
After the Period end, FairFX released a trading statement
reporting revenues for 2016 ahead of management expectations and 27
per cent. ahead of 2015. The corporate platform saw particularly
strong growth with turnover up 98 per cent. from the previous year.
In January 2017, FairFX announced the
acquisition of an e-money licence. This brings the possibility of
FairFX becoming a card issuing bank and reducing operating
costs.
With its corporate platform we believe FairFX is well positioned
to capture the business left behind by the withdrawal of high
street banks from small and medium enterprises.
Hansard Global plc (“Hansard”)
Hansard is a life insurance company based in the Isle of Man specialising in long-term savings
products. It writes policies via a network of more than 500
independent financial advisers who provide access to clients in
more than 170 countries. Its core customers are affluent
individuals looking for flexible and tax efficient investment
products. Hansard’s platform funnels policyholders’ savings to
external fund managers. Whilst the products are insurance policies,
Hansard’s liabilities are matched by its asset holdings
(unit-linked products) and so there is little of the insurance risk
associated with annuities or with-profits books of business.
Over the Period, the company has continued to execute its new
sales strategy, delivering a 56 per cent. sales growth (excluding a
related party transaction) for the second half of calendar
2016. On 19 January 2017,
Hansard announced a strategic alliance with Union Insurance
Company, a major insurer in the United
Arab Emirates. This will leverage Hansard’s administration
skills, which we believe are its core competence. On
23 February 2017, in its interim
results, the company announced its decision to reduce the dividend
starting in 2018, as it was necessary to fund future sales
growth.
We believe the company is delivering on its growth strategy and
remain supportive.
Shepherd Neame Ltd (“Shepherd
Neame”)
Shepherd Neame is Britain’s oldest brewer, founded in 1698 in
Kent. The brewery produces a range
of cask ales and filtered beers such as Spitfire, Whitstable Bay
Pale Ale and Asahi Super Dry. The
company owns and operates 335 high quality pubs and hotels
throughout the South East of England, the majority of which are freehold
sites. These pubs are a mixture of 261 tenanted, 67 managed
operations and 7 free-of-tie pubs, where the company’s beer
products are sold alongside wine and food and a growing
accommodation business that totals around 500 letting
rooms.
We believe there remains significant hidden value within
Shepherd Neame’s property portfolio. The NAV reported in
March 2017 stands at 1269 pence. This excludes any revaluation of the
unlicenced estate, which includes the 34 acre residual holding of
the Queen Court farm in Ospringe near
Faversham.
Activist Investment Process
The Fund originates ideas mainly from its screening processes
and its network of contacts, including its institutional
shareholders. Companies are valued with focus on their replacement
value, cash generation ability and balance sheet strength. In the
process, the Fund’s goal is to examine the company both ‘as it is’
and also ‘as it could be’ to maximise shareholder value.
Investments are typically made after an initial engagement,
which in some cases may have been preceded by the purchase of a
modest position in the company, which allows us to meet the company
as a shareholder. Engagement includes dialogue with the company
chairman and management, and normally also several non-executive
directors, as we build a network of knowledge around our holdings.
Site visits are undertaken to deepen our research and where
appropriate, independent research is commissioned. We attend
investee company annual general meetings to maintain close contact
with the board and other stakeholders.
Wherever possible, the Fund strives to develop an activist angle
and aims to contribute to the companies’ strategy with the goal of
maximising shareholder value. Where value is hidden or trapped, we
look for ways to realise it. Most of the Fund’s activism has taken
place in private, but the Fund remains willing to make its concerns
public when appropriate. The response of management and boards to
our suggestions has generally been encouraging. We remain
determined to ensure that our investments deliver their full
potential for all shareholders, and are committed to engage to the
degree required to achieve this.
Realisations
Over the Period, net realised gains, after taking in account
losses realised on put options purchased for portfolio insurance
purposes, amounted to £3.9 million.
The Fund realised the remainder of its holding in Pinewood Shepperton plc (“Pinewood”) during the
Period at a profit of £5.3 million. Taking into account all
realisations since July 2011, this
brings the total profit on the Fund’s investment in Pinewood to
£14.7 million.
During the Period, the Fund also realised its holding in
Restaurant Group at a profit of £1.3 million and realised a profit
of £3.3 million on part of its holding in Hurricane. During the
Period, the Fund realised losses from its holdings in Providence
Resources (-£0.6 million) and San Leon Energy (-£0.5 million).
Previous profitable exits include Dart Group plc, 4imprint Group
plc, Aer Lingus Group plc, Thorntons plc, Norcros plc, 3i Quoted
Private Equity plc, Delta plc, Kentz Corporation Ltd, Tate &
Lyle plc and Chloride Group plc.
Hedging Activity
The Fund continues to purchase FTSE put options as insurance
against a significant market sell-off. The net cost of these
options amounted to 3.6 per cent. of NAV over the period to 31
December 2016.
Outlook
We feel the global economic outlook remains uncertain, as the
full impact of Brexit and the Donald Trump presidency is yet to be
seen. We maintain strong conviction in the Fund’s bottom up
investment strategy, focusing on asset backed special situations
where it sees the potential to act as a catalyst to realise
shareholder value.
Crystal Amber Asset Management
(Guernsey) Limited
27 March 2017
Condensed
Statement of Profit or Loss and Other Comprehensive Income
(Unaudited)
For the six months
ended 31 December 2016
|
|
Six months ended 31 December |
|
Six months ended 31 December |
|
|
2016 |
|
2015 |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
Revenue |
Capital |
Total |
|
Revenue |
Capital |
Total |
|
Notes |
£ |
£ |
£ |
|
£ |
£ |
£ |
Income |
|
|
|
|
|
|
|
|
Dividend income from
listed investments |
|
1,861,886 |
- |
1,861,886 |
|
923,915 |
- |
923,915 |
Fixed deposit
interest |
|
- |
- |
- |
|
48 |
- |
48 |
Bank interest |
|
252 |
- |
252 |
|
10,471 |
- |
10,471 |
|
|
1,862,138 |
- |
1,862,138 |
|
934,434 |
- |
934,434 |
Net gains on
financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
|
Equities |
|
|
|
|
|
|
|
|
Net realised gain |
4 |
- |
8,832,775 |
8,832,775 |
|
- |
3,102,272 |
3,102,272 |
Movement in unrealised
gains/(losses) |
4 |
- |
64,123,866 |
64,123,866 |
|
- |
(8,957,963) |
(8,957,963) |
Money market
investments |
|
|
|
|
|
|
|
|
Movement in unrealised
gains |
4 |
- |
- |
- |
|
- |
4,496 |
4,496 |
Derivative
financial instruments |
|
|
|
|
|
|
|
|
Realised loss |
4 |
- |
(4,973,571) |
(4,973,571) |
|
- |
(190,420) |
(190,420) |
Movement in unrealised
gains/(losses) |
4 |
- |
5,887,194 |
5,887,194 |
|
- |
(2,727,640) |
(2,727,640) |
Total
income/(loss) |
|
1,862,138 |
73,870,264 |
75,732,402 |
|
934,434 |
(8,769,255) |
(7,834,821) |
Expenses |
|
|
|
|
|
|
|
|
Transaction costs |
|
- |
214,538 |
214,538 |
|
- |
133,100 |
133,100 |
Exchange movements on
revaluation of investments |
|
- |
(76,135) |
(76,135) |
|
- |
(378,656) |
(378,656) |
Management fees |
8 |
1,438,909 |
- |
1,438,909 |
|
1,314,947 |
- |
1,314,947 |
Performance fees |
8 |
- |
5,714,940 |
5,714,940 |
|
- |
- |
- |
Directors'
remuneration |
|
58,914 |
- |
58,914 |
|
57,500 |
- |
57,500 |
Administration
fees |
|
111,783 |
- |
111,783 |
|
91,965 |
- |
91,965 |
Custodian fees |
|
47,655 |
- |
47,655 |
|
38,621 |
- |
38,621 |
Audit fees |
|
10,920 |
- |
10,920 |
|
10,091 |
- |
10,091 |
Other expenses |
|
105,546 |
- |
105,546 |
|
97,549 |
- |
97,549 |
|
|
1,773,727 |
5,853,343 |
7,627,070 |
|
1,610,673 |
(245,556) |
1,365,117 |
Return/(loss) for
the Period |
|
88,411 |
68,016,921 |
68,105,332 |
|
(676,239) |
(8,523,699) |
(9,199,938) |
Basic and diluted
earnings/(loss) per share (pence) |
2 |
0.09 |
68.70 |
68.79 |
|
(0.73) |
(9.20) |
(9.93) |
All items in the above statement derive from continuing
operations.
The total column of this statement represents the Company’s
Statement of Profit or Loss and Other Comprehensive Income prepared
in accordance with IFRS. The supplementary information on the
allocation between income return and capital return is presented
under guidance published by the AIC.
Condensed
Statement of Financial Position (Unaudited)
As at 31 December 2016
|
|
As
at |
|
As
at |
|
As
at |
|
|
31
December |
|
30
June |
|
31
December |
|
|
2016 |
|
2016 |
|
2015 |
|
|
(Unaudited) |
|
(Audited) |
|
(Unaudited) |
ASSETS |
Notes |
£ |
|
£ |
|
£ |
Cash and cash
equivalents |
|
764,000 |
|
1,317,389 |
|
7,673,427 |
Trade and other
receivables |
|
797,806 |
|
463,510 |
|
347,738 |
Financial assets
designated at FVTPL |
4 |
221,451,533 |
|
151,090,246 |
|
137,009,952 |
Total
assets |
|
223,013,339 |
|
152,871,145 |
|
145,031,117 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Trade and other
payables |
|
8,555,747 |
|
1,347,074 |
|
227,325 |
Total
liabilities |
|
8,555,747 |
|
1,347,074 |
|
227,325 |
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
Capital and
reserves attributable to the Company’s equity shareholders |
|
|
|
|
|
|
Share capital |
5 |
989,998 |
|
989,998 |
|
989,998 |
Treasury shares |
6 |
(972,800) |
|
(720,478) |
|
(8,972,339) |
Distributable
reserve |
|
105,058,397 |
|
109,977,886 |
|
111,941,615 |
Retained earnings |
|
109,381,997 |
|
41,276,665 |
|
40,844,518 |
Total
equity |
|
214,457,592 |
|
151,524,071 |
|
144,803,792 |
|
|
|
|
|
|
|
Total liabilities
and equity |
|
223,013,339 |
|
152,871,145 |
|
145,031,117 |
|
|
|
|
|
|
|
NAV per share
(pence) |
3 |
218.02 |
|
153.79 |
|
155.90 |
The financial statements were approved by the Board of Directors
and authorised for issue on 27 March
2017.
William
Collins
Sarah
Evans
Chairman
Director
27 March
2017
27 March 2017
Condensed
Statement of Changes in Equity (Unaudited)
For the six months
ended 31 December 2016
|
|
Share |
Treasury |
Distributable |
Retained earnings |
|
Total |
|
Notes |
Capital |
Shares |
Reserve |
Capital |
Revenue |
Total |
Equity |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
Opening balance at 1
July 2016 |
|
989,998 |
(720,478) |
109,977,886 |
42,151,632 |
(874,967) |
41,276,665 |
151,524,071 |
Purchase of Company
shares into Treasury |
6 |
- |
(252,322) |
- |
- |
- |
- |
(252,322) |
Dividends paid in the
Period |
7 |
- |
- |
(4,919,489) |
- |
- |
- |
(4,919,489) |
Return for the
Period |
|
- |
- |
- |
68,016,921 |
88,411 |
68,105,332 |
68,105,332 |
Balance at 31 December
2016 |
|
989,998 |
(972,800) |
105,058,397 |
110,168,553 |
(786,556) |
109,381,997 |
214,457,592 |
|
|
|
|
|
|
|
|
|
|
Share |
Treasury |
Distributable |
Retained earnings |
|
Total |
|
Notes |
Capital |
Shares |
Reserve |
Capital |
Revenue |
Total |
Equity |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
Opening balance at 1
July 2015 |
|
989,998 |
(9,009,985) |
114,181,017 |
49,606,601 |
437,855 |
50,044,456 |
156,205,486 |
Purchase of Company
shares into Treasury |
6 |
- |
(393,061) |
- |
- |
- |
- |
(393,061) |
Sale of Company shares
from Treasury |
6 |
- |
430,707 |
- |
- |
- |
- |
430,707 |
Premium on sale of
Company shares from Treasury |
|
- |
- |
75,405 |
- |
- |
- |
75,405 |
Dividends paid in the
Period |
|
- |
- |
(2,314,807) |
- |
- |
- |
(2,314,807) |
Loss for the
Period |
|
- |
- |
- |
(8,523,699) |
(676,239) |
(9,199,938) |
(9,199,938) |
Balance at 31 December
2015 |
|
989,998 |
(8,972,339) |
111,941,615 |
41,082,902 |
(238,384) |
40,844,518 |
144,803,792 |
Condensed
Statement of Cash Flows (Unaudited)
For the six months
ended 31 December 2016
|
|
Six
months |
|
Six
months |
|
|
ended |
|
ended |
|
|
31
December |
|
31
December |
|
|
2016 |
|
2015 |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
£ |
|
£ |
Cashflows from
operating activities |
|
|
|
|
Dividend income
received from listed investments |
|
1,519,269 |
|
679,359 |
Fixed deposit interest
received |
|
- |
|
48 |
Bank interest
received |
|
2,285 |
|
11,502 |
Management fees
paid |
|
(1,438,909) |
|
(1,314,947) |
Performance fee
paid |
|
- |
|
(653,962) |
Directors’ fees
paid |
|
(58,914) |
|
(57,500) |
Other expenses
paid |
|
(248,542) |
|
(247,381) |
Net cash outflow
from operating activities |
|
(224,811) |
|
(1,582,881) |
|
|
|
|
|
Cashflows from
financing activities |
|
|
|
|
Purchase of Ordinary
shares into Treasury |
|
(252,322) |
|
(393,061) |
Sale of Ordinary
shares from Treasury |
|
- |
|
506,112 |
Dividends paid |
|
(2,460,370) |
|
(2,314,807) |
Net cash outflow
from financing activities |
|
(2,712,692) |
|
(2,201,756) |
|
|
|
|
|
Cashflows from
investing activities |
|
|
|
|
Purchase of equity
investments |
|
(35,322,456) |
|
(16,855,037) |
Sale of equity
investments |
|
43,748,529 |
|
14,722,108 |
Purchase of money
market investments |
|
- |
|
(6,000,000) |
Purchase of derivative
financial instruments |
|
(5,913,500) |
|
(4,845,800) |
Sale of derivative
financial instruments |
|
86,079 |
|
5,069,846 |
Transaction charges on
purchase and sale of investments |
|
(214,538) |
|
(133,100) |
Net cash
inflow/(outflow) from investing activities |
|
2,384,114 |
|
(8,041,983) |
|
|
|
|
|
Net decrease in cash
and cash equivalents during the Period |
|
(553,389) |
|
(11,826,620) |
Cash and cash
equivalents at beginning of Period |
|
1,317,389 |
|
19,500,047 |
Cash and cash
equivalents at end of Period |
|
764,000 |
|
7,673,427 |
The Notes to the Unaudited Condensed Financial Statements form
part of these financial statements.
Notes to the
Unaudited Condensed Financial Statements
For the six months
ended 31 December 2016
General Information
The Company was incorporated and registered in Guernsey on
22 June 2007 and is governed under
the provisions of the Companies Law. The registered office address
is Heritage Hall, Le Marchant
Street, St. Peter Port, Guernsey, GYI 4HY. The Company was
established to provide shareholders with an attractive total return
which is expected to comprise primarily capital growth with the
potential for distributions of up to 5
pence per share per annum following consideration of the
accumulated retained earnings as well as the unrealised gains and
losses at that time. The Company seeks to achieve this through the
investment in a concentrated portfolio of undervalued companies
which are expected to be predominantly, but not exclusively, listed
or quoted on UK markets and which have a typical market
capitalisation of between £100 million and £1,000 million.
The Company’s Ordinary shares were listed and admitted to
trading on AIM, on 17 June 2008. The
Company is also a member of the AIC.
1.
SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to those balances considered material to
the financial statements throughout the current Period, unless
otherwise stated.
Basis of preparation
The Interim Financial Statements have been prepared in
accordance with IAS 34, Interim Financial Reporting.
The Interim Financial Statements do not include all the
information and disclosures required in the Annual Financial
Statements and should be read in conjunction with the Company’s
Annual Financial Statements for the year to 30 June 2016. The Annual Financial Statements
have been prepared in accordance with IFRS.
The same accounting policies and methods of computation are
followed in the Interim Financial Statements as in the Annual
Financial Statements for the year ended 30
June 2016.
The presentation of the Interim Financial Statements is
consistent with the Annual Financial Statements. Where
presentational guidance set out in the SORP “Financial Statements
of Investment Trust Companies and Venture Capital Trusts” issued by
the AIC in November 2014 is
consistent with the requirements of IFRS, the Directors have sought
to prepare the financial statements on a basis compliant with the
recommendations of the SORP. In particular, supplementary
information which analyses the Statement of Profit or Loss and
Other Comprehensive Income between items of a revenue and capital
nature has been presented alongside the total Statement of Profit
or Loss and Comprehensive Income.
The Company does not operate in an industry where significant or
cyclical variations as a result of seasonal activity are
experienced during the financial year. Income and dividends from
investments will vary according to the construction of the
portfolio from time to time.
Going concern
The Directors are confident that the Company has adequate
resources to continue in operational existence for the foreseeable
future and do not consider there to be any threat to the going
concern status of the Company.
The Directors have specifically considered the implications of
the continuation vote to be proposed at the 2017 AGM on the
application of the going concern basis. The continuation vote is
scheduled to occur every two years. The Directors have no reason to
doubt that shareholders will vote for the Company to continue as
constituted at the AGM, scheduled for November 2017, given the positive performance of
the Company since the previous continuation vote at the 2015 AGM.
Therefore, the Directors conclude that there is no material
uncertainty which may cast significant doubt on the ability of the
Company to continue as a going concern. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements.
Segmental reporting
Operating segments are reported in a manner consistent with
internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board as a whole. The key
measure of performance used by the Board to assess the Company’s
performance and to allocate resources is the total return on the
Company’s NAV, as calculated under IFRS, and therefore no
reconciliation is required between the measure of profit or loss
used by the Board and that contained in these financial
statements.
For management purposes, the Company is domiciled in Guernsey
and is engaged in a single segment of business mainly in one
geographical area, being investment in UK equity instruments, and
therefore the Company has only a single operating segment.
2.
BASIC AND DILUTED EARNINGS/(LOSS) PER SHARE
Earnings/(loss) per share is based on the following data:
|
|
Six
months |
|
Six
months |
|
|
ended |
|
ended |
|
|
31
December |
|
31
December |
|
|
2016 |
|
2015 |
|
|
(Unaudited) |
|
(Unaudited) |
Return/(loss) for the
Period |
|
£68,105,332 |
|
£(9,199,938) |
Weighted average
number of issued Ordinary shares |
|
98,999,762 |
|
92,674,999 |
Basic and diluted
earnings/(loss) per share (pence) |
|
68.79 |
|
(9.93) |
3.
NET ASSET VALUE PER SHARE
NAV per share is based on the following data:
|
As
at |
|
As
at |
|
As
at |
|
31
December |
|
30
June |
|
31
December |
|
2016 |
|
2016 |
|
2015 |
|
(Unaudited) |
|
(Audited) |
|
(Unaudited) |
NAV per Condensed
Statement of Financial Position |
£214,457,592 |
|
£151,524,071 |
|
£144,803,792 |
Total number of issued
Ordinary shares (excluding Treasury shares) |
98,364,762 |
|
98,524,762 |
|
92,881,276 |
NAV per share
(pence) |
218.02 |
|
153.79 |
|
155.90 |
4.
FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR
LOSS
|
1
July |
|
1
July |
|
1
July |
|
2016
to |
|
2015
to |
|
2015
to |
|
31
December |
|
30
June |
|
31
December |
|
2016 |
|
2016 |
|
2015 |
|
(Unaudited) |
|
(Audited) |
|
(Unaudited) |
|
£ |
|
£ |
|
£ |
Equity
investments |
211,706,765 |
|
148,086,522 |
|
130,701,056 |
Money market
investments |
- |
|
- |
|
6,004,496 |
Derivative financial
instruments |
9,744,768 |
|
3,003,724 |
|
304,400 |
|
221,451,533 |
|
151,090,246 |
|
137,009,952 |
Equity
investments |
|
|
|
|
|
Cost brought
forward |
153,875,142 |
|
160,110,908 |
|
160,110,908 |
Purchases |
34,335,995 |
|
81,096,969 |
|
11,492,838 |
Sales |
(43,748,529) |
|
(68,688,860) |
|
(14,664,877) |
Net realised gain |
8,832,775 |
|
(18,643,875) |
|
3,102,272 |
Cost carried
forward |
153,295,383 |
|
153,875,142 |
|
160,041,141 |
Unrealised losses
brought forward |
(5,852,434) |
|
(20,171,543) |
|
(20,171,543) |
Movement in unrealised
gains/(losses) |
64,123,866 |
|
14,319,109 |
|
(8,957,963) |
Unrealised
gains/(losses) carried forward |
58,271,432 |
|
(5,852,434) |
|
(29,129,506) |
Effect of exchange
rate movements |
139,950 |
|
63,814 |
|
(210,579) |
Fair value of
equity investments |
211,706,765 |
|
148,086,522 |
|
130,701,056 |
Money market
investments |
|
|
|
|
|
Cost brought
forward |
- |
|
- |
|
- |
Purchases |
- |
|
- |
|
6,000,000 |
Sales |
- |
|
- |
|
- |
Realised gain |
- |
|
- |
|
- |
Cost carried
forward |
- |
|
- |
|
6,000,000 |
Unrealised gains
brought forward |
- |
|
- |
|
- |
Movement in unrealised
gains |
- |
|
- |
|
4,496 |
Unrealised gains
carried forward |
- |
|
- |
|
4,496 |
Fair value of money
market investments |
- |
|
- |
|
6,004,496 |
Derivative
financial instruments |
|
|
|
|
|
Cost brought
forward |
1,023,001 |
|
1,078,000 |
|
1,078,000 |
Purchases |
5,913,500 |
|
11,773,346 |
|
4,845,800 |
Sales |
(86,079) |
|
(8,844,051) |
|
(4,936,340) |
Realised losses |
(4,973,571) |
|
(2,984,294) |
|
(190,420) |
Cost carried
forward |
1,876,851 |
|
1,023,001 |
|
797,040 |
Unrealised gains
brought forward |
1,980,723 |
|
2,235,000 |
|
2,235,000 |
Movement in unrealised
gains/(losses) |
5,887,194 |
|
(254,277) |
|
(2,727,640) |
Unrealised
gains/(losses) carried forward |
7,867,917 |
|
1,980,723 |
|
(492,640) |
Fair value of
derivative financial instruments |
9,744,768 |
|
3,003,724 |
|
304,400 |
Total financial
assets designated at FVTPL |
221,451,533 |
|
151,090,246 |
|
137,009,952 |
At the reporting date the Company’s derivative financial
instruments consisted of four (30 June
2016: two) FTSE 100 Index Put Option positions, purchased as
protection against a significant market sell-off and two warrant
instruments in FairFX and Hurricane (30 June
2016: two) for the purchase of ordinary shares.
At the reporting date, the warrant instruments in FairFX and
Hurricane were valued using a Black Scholes valuation
technique.
The following table details the Company’s positions in
derivative financial instruments:
|
Nominal amount |
Value |
31 December
2016 |
|
£ |
Derivative
financial instruments |
|
|
Puts on UKX P6500
(expiry: January 2017) |
2,500 |
125,000 |
Puts on UKX P6900
(expiry: January 2017) |
1,000 |
245,000 |
Puts on UKX P6500
(expiry: February 2017) |
2,000 |
460,000 |
Puts on UKX P6700
(expiry: February 2017) |
1,000 |
400,000 |
FairFX warrant
instrument |
6,000,000 |
673,602 |
Hurricane warrant
instrument |
23,333,333 |
7,841,166 |
|
29,339,833 |
9,744,768 |
|
|
|
|
Nominal amount |
Value |
30 June
2016 |
|
£ |
Derivative
financial instruments |
|
|
Puts on UKX P5800
(expiry: July 2016) |
700 |
49,000 |
Puts on UKX P6000
(expiry: August 2016) |
1,000 |
665,000 |
FairFX warrant
instrument |
23,333,333 |
1,555,354 |
Hurricane warrant
instrument |
7,500,000 |
734,370 |
|
30,835,033 |
3,003,724 |
5.
SHARE CAPITAL AND RESERVES
The authorised share capital of the Company is £3,000,000
divided into 300 million Ordinary shares of £0.01 each.
The issued share capital of the Company is comprised as
follows:
|
31 December 2016 |
30 June 2016 |
|
(Unaudited) |
(Audited) |
|
Number |
£ |
Number |
£ |
Allotted, called up
and fully paid Ordinary shares at £0.01 each |
98,999,762 |
989,998 |
98,999,762 |
989,998 |
6.
TREASURY SHARES
|
Six months ended |
Year ended |
|
31 December 2016 |
30 June 2016 |
|
(Unaudited) |
(Audited) |
|
Number |
£ |
Number |
£ |
Opening balance |
475,000 |
720,478 |
6,163,486 |
9,009,985 |
Treasury shares
purchased during the Period/year |
160,000 |
252,322 |
725,000 |
1,113,539 |
Treasury shares sold
during the Period/year |
- |
- |
(6,413,486) |
(9,989,766) |
Premium transferred to
distribution reserve |
- |
- |
- |
586,720 |
Closing balance |
635,000 |
972,800 |
475,000 |
720,478 |
During the period ended 31 December
2016, 160,000 (2015: 250,000) Treasury shares were purchased
at an average price of 157.7 pence
per share, representing an average discount to NAV at the time of
purchase of 4.5 per cent., (2015: 157.22
pence per share). During the period ended 31 December 2016, Nil (2015: 295,000) Treasury
shares were sold, representing a premium above cost of £Nil (2015:
£75,405).
7.
DIVIDENDS
On 14 July 2016, the Company
declared an interim dividend of £2,460,369, equating to
2.5 pence per Ordinary share, which
was paid on 19 August 2016 to
shareholders on record on the register on 22
July 2016.
On 14 December 2016, the Company
declared an interim dividend of £2,459,120, equating to
2.5 pence per Ordinary share, which
was paid on 19 January 2017 to
shareholders on record on the register on 22
December 2016.
8.
RELATED PARTIES
Richard Bernstein is a director
and a member of the Investment Manager, a member of the Investment
Adviser and a holder of 10,000 (30 June
2016: 10,000) Ordinary shares in the Company, representing
0.01 per cent. (30 June 2016: 0.01
per cent.) of the voting share capital of the Company at
31 December 2016.
During the Period the Company incurred management fees of
£1,438,909 (2015: £1,314,947) none of which was outstanding at
31 December 2016 (30 June 2016: £Nil). The Company also accrued
performance fees of £5,714,940 (2015: £Nil) all of which was
outstanding and is included in trade and other payables as at
31 December 2016 (30 June 2016: £Nil). Under the terms of the
Investment Management Agreement between the Company and the
Investment Manager, if the NAV per share at 30 June 2017 exceeds the 2017 performance hurdle,
a performance fee will be payable to the Investment Manager. The
performance hurdle represents an expected return on share capital
since placing compounded at a rate of 7 per cent. up to
20 August 2013, 8 per cent. up to
27 January 2015 and 10 per cent.
after that date.
As the NAV per share at 31 December
2016 exceeded the performance hurdle at that date, a
performance fee has been accrued in the Interim Financial
Statements. In the event that, on 30 June
2017, the NAV per share exceeds the 2017 performance hurdle,
the performance fee will be an amount equal to 20 per cent. of the
excess of the NAV per share at that date over the 2017 performance
hurdle multiplied by the time weighted average number of Ordinary
shares in issue during the year ending 30 June 2017. Depending
on whether the Ordinary shares are trading at a discount or a
premium to the Company's NAV per share at 30
June 2017, the performance fee will be either payable in
cash (subject to the Investment Manager being required to use the
cash payment to purchase Ordinary shares in the market) or
satisfied by the sale of Ordinary shares out of Treasury or by the
issue of new fully paid Ordinary shares at the closing mid-market
closing price on 30 June 2017,
respectively.
As at 31 December 2016 the
Investment Manager held 4,015,666 Ordinary shares (30 June 2016: 4,015,606) of the Company,
representing 4.08 per cent. (30 June
2016: 4.08 per cent.) of the voting share capital.
The interests of the Directors in the share capital of the
Company at the Period/year end and as at the date of this report
are as follows:
|
31 December 2016 |
|
30 June 2016 |
|
Number of Ordinary Shares |
Issued
Share Capital |
|
Number
of Ordinary Shares |
Issued
Share Capital |
William Collins |
25,000 |
0.03% |
|
25,000 |
0.03% |
Sarah Evans |
25,000 |
0.03% |
|
25,000 |
0.03% |
Total |
50,000 |
0.06% |
|
50,000 |
0.06% |
All related party transactions are carried out on an arm’s
length basis.
9.
POST BALANCE SHEET
EVENTS
On 6 February 2017 the Company
reported that its unaudited NAV at 31
January 2017 was 218.51 pence
per share.
On 6 March 2017 the Company
reported that its unaudited NAV at 28
February 2017 was 231.52 pence
per share.
10.
AVAILABILITY OF INTERIM REPORT
Copies of the Interim Report will be
available to download from the Company’s website
www.crystalamber.com.
Glossary of
Capitalised Defined Terms
“AIC” means the Association of Investment Companies;
“AIM” means the Alternative Investment Market of the
London Stock Exchange;
“Annual Financial Statements” means the audited annual
financial statements of the Company, including the Statement of
Profit or Loss and Other Comprehensive Income, the Statement of
Financial Position, the Statement of Changes in Equity, the
Statement of Cash Flows and associated notes;
“Annual Report” means the annual publication of the
Company to the shareholders to describe their operations and
financial conditions, together with the Company’s financial
statements;
“Board” or “Directors” or “Board of
Directors” means the directors of the Company;
“Company” or “Fund” means Crystal Amber Fund
Limited;
“Companies Law” means the Companies (Guernsey) Law, 2008,
(as amended);
“FTSE” means the Financial Times Stock
Exchange;
“FVTPL” means Fair Value Through Profit or Loss;
“IAS” means international accounting standards as
issued by the Board of the International Accounting Standards
Committee;
“IFRS” means the International Financial Reporting
Standards, being the principles-based accounting standards,
interpretations and the framework by that name issued by the
International Accounting Standards Board, as adopted by the
European Union;
“Interim Financial Statements” means the unaudited
condensed interim financial statements of the Company, including
the Condensed Statement of Profit or Loss and Other Comprehensive
Income, the Condensed Statement of Financial Position, the
Condensed Statement of Changes in Equity, the Condensed Statement
of Cash Flows and associated notes;
“Interim Report” means the Company’s interim report and
unaudited condensed financial statements for the period ended 31
December;
“Investment Management Agreement” means the agreement
between the Company and the Investment Manager, dated 16 June 2008, as amended on 21 August 2013 and further amended on
27 January 2015;
“NAV” or “Net Asset Value” means the value
of the assets of the Company less its liabilities as calculated in
accordance with the Company’s valuation policies and expressed in
Pounds Sterling;
“NAV per share” means the Net Asset Value per Ordinary
share of the Company and is expressed in pence;
“Ordinary shares” means allotted, called up and
fully paid Ordinary shares of the Company of £0.01 each;
“Period” means the six months to 31 December 2016;
“SORP” means Statement of Recommended Practice;
“Treasury” means the reserve of Ordinary shares
that have been repurchased by the Company;
“Treasury shares” means Ordinary shares in the Company
that have been repurchased by the Company and are held as Treasury
shares;
“UK” or “United Kingdom” means the United Kingdom of Great Britain and Northern Ireland;
“US” means the means the United
States of America, its territories and possessions, any
state of the United States and the
District of Columbia; and
“£” or “Pounds Sterling” or “Sterling”
means British pound sterling and “pence” means British
pence.
Directors and
General Information
Directors
William Collins (Chairman)
Sarah Evans (Senior Independent Director)
Nigel Ward
Christopher Waldron
Investment Adviser
Crystal Amber Advisers (UK) LLP
29 Curzon Street
London W1J 7TL
Administrator and Secretary
Heritage International Fund Managers Limited
Heritage Hall
Le Marchant Street
St. Peter Port
Guernsey GY1 4HY
Broker
Pre 09/09/2016:
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT
Post 09/09/2016:
Winterflood Investment Trusts
The Atrium Building
Cannon Bridge House
25 Dowgate Hill
London EC4R 2GA
Independent Auditor
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
St. Peter Port
Guernsey GY1 1WR
Identifiers
ISIN: GG00B1Z2SL48
Sedol: B1Z2SL4
Ticker: CRS
Website: crystalamber.com |
Registered
Office
Heritage Hall
Le Marchant Street
St. Peter Port
Guernsey GY1 4HY
Investment Manager
Crystal Amber Asset Management (Guernsey) Limited
Heritage Hall
Le Marchant Street
St. Peter Port
Guernsey GY1 4HY
Nominated Adviser
Allenby Capital Limited
3 St. Helen’s Place
London EC3A 6AB
Legal Advisers to the Company
As to English Law
Norton Rose Fulbright LLP
3 More London Riverside
London SE1 2AQ
As to Guernsey Law
Carey Olsen
PO Box 98
Carey House
Les Banques
St. Peter Port
Guernsey GY1 4BZ
Custodian
ABN AMRO (Guernsey) Limited
PO Box 253
Martello Court
Admiral Park
St. Peter Port
Guernsey GY1 3QJ
Registrar
Capita Registrars (Guernsey) Limited
Longue Hougue House
St Sampson
Guernsey GY2 4JN |