REG-Crystal Amber Fund Limited: Monthly Net Asset Value

Crystal Amber FundAnnouncement

10/04/2018 07:05

10 April 2018
 

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 31 March 2018 was 206.46 pence (28 February 2018: 202.98 pence
per share). 

The proportion of the Fund’s NAV at 31 March 2018 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 held  
 Hurricane Energy plc                      52.2                      8.0%                 
 Northgate plc                             28.8                      6.3%                 
 FairFX Group plc                          26.2                      18.5%                
 STV Group plc                             21.4                      16.6%                
 NCC Group plc                             10.8                      2.0%                 
 Leaf Clean Energy Co.                     9.0                       29.9%                
 Ocado Group plc                           7.9                       0.2%                 
 De La Rue plc                             7.0                       1.3%                 
 Woodford PCT plc                          5.0                       0.7%                 
 GI Dynamics Inc                           4.3                       47.5%                
 Total of ten largest shareholdings       172.6                                           
 Other investments                         33.1                                           
 Cash and accruals                         0.8                                            
 Total NAV                                206.5                                           

Investment Adviser’s commentary on the portfolio

Over the quarter to 31 March 2018, NAV per share grew by 8.3%.

On 18 January 2018, the Fund paid a 2.5p dividend declared in December 2017.

Within the portfolio, the top contributors over the quarter were Ocado Group
plc (+2.9%), FairFX Group plc (+1.8%) and Hurricane Energy (+1.1%). The main
detractors were Northgate plc (-1.7%), NCC Group plc (-1.3%) and Leaf Clean
Energy Co. (-0.6%). The Fund’s put options contributed 6.5% to the NAV.

Hurricane Energy plc (“Hurricane”)

Hurricane’s share price rose by 4.3% over the quarter as it reported
progress with its Early Production System (EPS), the new chairman recruitment
and governance improvements.

In February, the company announced the successful trial fit test of its
production vessel Aoka Mizu with its newly manufactured buoy. A new buoy had
to be constructed to withstand the West of Shetland weather conditions, and an
incorrect fit with the vessel was a significant risk to delivering the EPS
project on time and on budget. In March, Hurricane’s contractor TechnipFMC
completed the “Xmas trees” required for the two EPS wells together with
the subsea control system that will be installed on the Aoka Mizu. Those long
lead items were ordered by the company with the capital raised in October
2016. At the end of March, Hurricane confirmed that the seabed where the EPS
infrastructure will be based had been satisfactorily cleared by TechnipFMC,
and it is ready to commence installation operations.

Over the period the Fund engaged with the board and key shareholders over the
selection of the new chairman and corporate governance issues. The Fund looks
forward to the announcement of the new chairman and seeing through the
delivery of the Hurricane’s EPS. 

The Fund has supported Hurricane’s progress since 2013 and it is pleased to
see that the company is on track for first oil in the first half of 2019.

FairFX Group plc (“FairFX”)

Over the period, FairFX’s share price increased by 13.2% on the back of
positive trading updates and the acquisition of City Forex.

In 2017, the company’s turnover increased by 39% to £1.1 billion. Growth
benefited from the acquisition of CardOne Banking completed in August 2017.
Increased scale has brought additional capabilities that can be delivered to
its growing customer base. Management depth will accelerate product innovation
in 2018. Scale has also brought cost savings and the opportunity to improve
supplier terms. Additional cost savings opportunities were unveiled in April
with the announcement that FairFX will self-issue its Mastercard branded
cards.

In February, FairFX announced the acquisition of City Forex for £6 million.
City Forex services the international payments and travel currency segments,
both in retail and business markets. The company had been a partner of FairFX
since 2007 in the Travel Currency segment. As with previous acquisitions, the
combination brings revenue and cost synergies, and confirms FairFX as the key
consolidator in the space.

At 31 March, the business had a market value of £140.6m with net cash of
£10m with consensus market forecasts placing the share price on a current
year PE of 18x and a 2019 PE of 10x.

Northgate plc (“Northgate”)

Over the quarter, Northgate's share price declined by 11%. The Fund is
currently the third largest shareholder in Northgate.

Despite a favourable macroeconomic backdrop, Northgate's share price is
trading at close to its five year low, a discount of approximately 15% to
tangible net asset value.

The Fund is deeply disappointed by the performance of the company. Despite
operational improvements made by the new Chief Executive, the board has failed
in two important respects:

i) an alarming lack of strategic focus and a refusal to engage seriously with
proposals made by the Fund and supported by other shareholders to unlock value
and prompt a revaluation of the business by the market and

ii) poor management of communications with the stock market, including
apparent selective briefings, reneging on dividend commitments made on the
investor call of 22 February 2018 and changing disclosure in recent financial
statements resulting in reduced transparency.

After multiple frustrating engagements with the Board, we have concluded that
these failures should be laid primarily at the feet of the Chairman, Andrew
Page, who has demonstrated to us an inflexibility and unwillingness to listen
to the views of shareholders or lead the board in a manner conducive to good
relationships with investors and the creation of value.

The Fund notes last month's disclosure by The Restaurant Group PLC that, in
the period 2006 to 2017, the dividends paid by the company were not in
accordance with the Companies Act 2006. The Fund also notes that Andrew Page
was Chief Executive of The Restaurant Group PLC from 2002 until 2014.

Ocado Group plc (“Ocado”)

Ocado had another strong quarter with the share price increasing 33.7%. It
signed a second major international partnership with Sobeys of Canada. Ocado
also raised £143m in equity to have the financial firepower to sign multiple
international deals.

The Fund took profits on this position, realising a £5.5m gain, but continues
to believe that additional international deals are likely this year.  

Transactions in Own Shares

Over the quarter, the Fund bought back 361,500 of its own shares at an average
price of 194.75p per share as part of its buyback programme.  These shares
are held in Treasury.

For further enquiries please contact:

Crystal Amber Fund Limited
Chris Waldron (Chairman)
Tel: 01481 742 742

www.crystalamber.com

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
Richard Bernstein
Tel: 020 7478 9080



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