Crystal Amber Fund Limited Monthly Net Asset Value and Interim Dividend Declaration
12 July 2017 - 2:44AM
UK Regulatory
TIDMCRS
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 GBP12.7 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 GBP31.2 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 GBP42 million a year to GBP27.5 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 GBP37.3 million and together with dividends
received, generated a profit of GBP7.1 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
END
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