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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Crystal Amber Fund Limited | LSE:CRS | London | Ordinary Share | GG00B1Z2SL48 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 76.00 | 74.00 | 78.00 | 76.00 | 76.00 | 76.00 | 0.00 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Unit Inv Tr, Closed-end Mgmt | -2.14M | -5.58M | -0.0723 | -10.51 | 58.6M |
Hot Features
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TIDMCRS
13 September 2016
Crystal Amber Fund Limited
(the 'Fund' or the 'Company')
Final Results for the year ended 30 June 2016
Crystal Amber Fund Limited (the ???Company" or "Fund")
announces its final results for the year ended 30 June 2016.
Highlights
* Net Asset Value ("NAV") per share decreased 8.6 per cent over the year to
153.79p (168.26p at 30 June 2015, 155.90p at 31 December 2015). Including
the dividends paid, NAV total return per share over the twelve months
ended 30 June 2016 was -5.6 per cent.
* NAV per share recovered strongly after the year end, following the result
of the EU referendum (increase of 23.5 per cent from 30 June 2016 to 31
August 2016 after providing for the interim dividend of 2.5p per share)
representing a NAV total return of 25.1 per cent in the two month period
following year end.
* Successful exits from investments in Dart Group plc ("Dart") and 4imprint
Group plc ("4imprint"), realising gains of GBP6.7 million and GBP3.9 million
respectively.
* In January 2016, the Fund completed the placing of 6.1 million shares out
of Treasury, at NAV.
* Successful buy-back programme contributed to an average discount to NAV of
0.5 per cent over the year. Discount at 30 June 2016 was 3.8 per cent.
* In February 2016, Pinewood Group plc ("Pinewood") announced a strategic
review to evaluate ways to maximise shareholder value. After the year end,
Pinewood received a recommended cash offer, resulting in unrealised gains
for the Fund of GBP5.4 million. Taking into account realised gains since
April 2015, this brings the total realised and unrealised gains on the
Fund's investment in Pinewood to GBP6.1 million.
* New positions initiated in FairFX Group plc ("FairFX"), Northgate plc
("Northgate") and Restaurant Group plc ("Restaurant Group").
* The Fund was granted warrants in Hurricane Energy plc ("Hurricane") and
FairFX in exchange for the Fund's added contribution through engagement
with those companies.
William Collins, Chairman of Crystal Amber Fund Limited (the "Company" or
"Fund"), commented:
"Faced with an uncertain market outlook, the Fund has continued to find good
opportunities where it sees the potential to act as a catalyst in order to
realise shareholder value. The year saw the profitable exit of a number of the
Fund's investments and the sale of 6.4 million treasury shares at or above
NAV. The Fund has redeployed that capital into promising new opportunities.
We continue to engage with our investee companies with the confidence of our
proven activist investment process. Looking ahead, we feel the fallout
following "Brexit" has created a number of activist opportunities. The Fund
maintains a cautious stance on the outlook for markets, undertaking portfolio
hedging as insurance against a significant fall in markets. After the year end
the NAV rose sharply, with a NAV total return of 25.1 per cent from 30 June
2016 to 31 August 2016."
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 7167 6431
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
Chairman's Statement
I hereby present the ninth Annual Report of Crystal Amber Fund Limited for the
year ended 30 June 2016.
The economic backdrop for the year has been challenging on a number of fronts.
The UK's EU referendum created great uncertainty and the shock "Brexit" result
caused a temporary but severe drop in markets and depreciation of sterling.
Though markets rebounded, investors generally remain cautious on the near term
outlook. The Bank of England has reduced interest rates and provided further
stimulus measures, which have provided a boost to near term sentiment, but fail
to address the underlying issues facing the UK economy.
NAV at 30 June 2016 was GBP151.5 million, compared with an unaudited GBP144.8
million at 31 December 2015 and GBP156.2 million at 30 June 2015. NAV per share
was 153.79p as at 30 June 2016 compared with 155.90p at 31 December 2015 and
168.26p at 30 June 2015.
NAV per share decreased 8.6 per cent over the year to 153.79p (168.26p at 30
June 2015, 155.90p at 31 December 2015). Including the dividend paid, NAV total
return per share over the twelve months ended 30 June 2016 was -5.6 per cent.
During the year, the Fund bought back 725,000 of its own shares at an average
price of 153.59p and at an average discount to NAV of 3.4 per cent as part of
its programme to seek to eliminate any material discount to NAV. Over the year,
the shares traded at an average discount to NAV of 0.5 per cent. At the year
end the shares traded at a discount to NAV of 3.8 per cent and at 31 August
2016 the shares traded at a discount to NAV of 7.3 per cent.
The Fund declared interim dividends of 2.5p in both July 2015 and January 2016
in line with the dividend policy of 5p per year. Guernsey registered companies
are not required to obtain shareholder approval in respect of any interim
dividend and this policy is consistent with the Company's Admission documents.
The Board wishes to afford the shareholders the ability to approve the interim
dividends paid in this financial year and there will be an ordinary resolution
proposed at the forthcoming Annual General Meeting ("AGM") in this regard.
On 12 September 2016 the Company announced the appointment of a new broker,
Winterflood Investment Trusts, in place of Numis Securities Limited.
The Fund is cautious on the overall outlook for markets as uncertainty remains
not only about the implications of "Brexit" but also underlying issues still
facing the global economy. However, we believe the fallout from "Brexit" has
created a number of activist opportunities as companies are forced to adjust to
inevitable changes. Whilst continuing to engage closely with our existing
portfolio holdings, the Fund's focus remains on identifying these opportunities
and utilising our proven methods of active engagement to deliver value to
shareholders.
William Collins
Chairman
12 September 2016
Investment Manager's Report
Performance
The Fund's NAV per share decreased 8.6 per cent over the year to 153.79p
(168.26p at 30 June 2015, 155.90p at 31 December 2015). Taking into account
the 2.5p dividends declared in both July 2015 and January 2016, the total
return per share for the year was -5.6 per cent. This compares to the FTSE 250
Index total return of -4.6 per cent and FTSE Small Cap total return Index of
-1.5 per cent. Over the year, the Fund was on average 94.3 per cent invested,
with the balance held in cash. The impact on NAV of FTSE put options held in
the year was -3.5 per cent. Whilst impacting returns, by reducing the Fund's
market exposure, the holding risk of the portfolio was substantially reduced.
The main performance contributors were Dart (3.6 per cent of NAV), Pinewood
(1.9 per cent), Hurricane (1.7 per cent) and FairFX (1.6 per cent). The main
performance detractors were Johnston Press plc (-2.6 per cent), STV Group plc
("STV") (-2.4 per cent) and Tribal Group plc (-1.7 per cent).
Since the year end return of capital has been provided from NBNK Investments
plc and further proceeds are anticipated following the unconditional offer for
Pinewood.
The Fund's NAV per share recovered strongly following the market fallout on the
back of the "Brexit" result of the EU referendum, with an increase of 23.5 per
cent from 30 June 2016 to 31 August 2016 after providing for the interim
dividend of 2.5p per share representing a NAV total return of 25.1 per cent in
the two month period following the year end.
Portfolio
The table below lists the Fund's top ten holdings at 30 June 2016. It details
the stake that those positions represent in the investee companies and their
contribution to the Fund's NAV performance over the year.
Top ten holdings Pence per Percentage Percentage Contribution to
share of NAV of investee NAV performance
equity held
Grainger plc 30.5 19.8% 3.4% -1.2%
Hurricane Energy plc 26.4 17.2% 15.6% 1.7%
Pinewood Group plc 17.1 11.1% 5.7% 1.9%
Northgate plc 13.2 8.6% 3.0% -1.6%
Leaf Clean Energy Co 11.8 7.7% 1.1%
29.9%
STV Group plc 9.5 6.2% 7.8% -2.4%
FairFX Group plc 7.8 5.1% 1.6%
24.9%
Sutton Harbour Holdings 7.7 5.0% -1.3%
plc 29.3%
Restaurant Group plc 6.3 4.1% 1.1% -0.7%
Hansard Global plc 4.8 3.1% 3.3% 0.5%
Total of ten largest 135.1 87.8%
holdings 0.7 0.5%
FTSE Put Options
Other investments 17.5 11.4%
Cash and accruals 0.5 0.3%
Total NAV 153.8
At the end of the year, the Fund's top ten positions represented 87.8 per cent
of the NAV, compared with 72.5 per cent at 30 June 2015. At 30 June 2016, the
Fund's total number of positions was 22 (30 June 2015: 23). The cash and
accruals position at 0.3 per cent of NAV had decreased from 8.7 per cent at 30
June 2015.
Six of the Fund's top ten positions at the end of the year, Grainger plc
("Grainger"), Hurricane, Pinewood, Leaf Clean Energy Co ("Leaf"), STV and
Sutton Harbour Holdings plc ("Sutton Harbour"), were within the top ten
holdings at the beginning of the year. Over the year, the Fund added to its
investments in Hurricane and Pinewood.
The Fund realised gains of GBP6.7 million on the disposal of its holding in Dart
and GBP3.9 million on its disposal of its holding in 4imprint. A share buy-back
in Leaf and reduction of the holding in Pinewood, realised profits of GBP0.86
million and GBP0.65 million, respectively.
Over the year, the Fund increased its position in Grainger to 3.4 per cent of
Grainger's share capital. The Fund continues to engage constructively with the
management and board.
The Fund also continued to build its position in Hurricane, investing a further
GBP7 million at the company's placing of shares in May 2016, bringing its total
holding to 15.6 per cent of issued share capital and making the Fund the second
largest shareholder. For its strategic input, the Fund was also granted three
year warrants to subscribe for up to 23.3 million shares at 20p per share.
Proceeds of the placing were used to fund the drilling of the Lancaster 7
wells, for which results far exceeding estimates were announced in September
2016.
The Fund exited its position in Dart, realising a profit of GBP6.7 million. The
Fund's initial investment thesis viewed Dart as a value play on a business with
a strong growth trajectory that stood to benefit from a lower oil price and
improved consumer environment; following a substantial re-rating of the stock,
the Fund was happy to exit the position, realising a profit of GBP6.7 million and
a return of 72 per cent.
The Fund exited its position in 4imprint realising a profit of GBP3.9 million
following continued delivery of impressive growth numbers.
The holding in Juridica plc ("Juridica") was significantly reduced over the
year. The disposal of 99.6 per cent of the holding realised a loss of GBP1.2
million but the Fund received GBP198,000 in dividends over the year. The Fund had
disposed of part of its holding in November 2015, when Juridica's share price
fell 20 per cent on the back of the result of a case which produced just 21 per
cent of its assumed value. Shortly afterwards, the board announced its
decision to make no further investments and return cash to shareholders in a
timely manner.
Over the year, the Fund exited its investment in Ophir Energy plc, realising a
loss of GBP2.4 million. The share price fell sharply (29 per cent) following the
announcement that its deal with US oil services giant, Schlumberger, to develop
its Fortuna FLNG project, had fallen through.
Strategy
The Fund remains focused on special situations where value can be released
regardless of the market direction.
The average market capitalisation of the Fund's investee companies has
decreased slightly from GBP372 million (30 June 2015) to GBP346 million (30 June
2016) but remains significantly higher than at 30 June 2014 when it stood at GBP
212 million.
Activist Investment Process
The Fund originates ideas from its screening processes and its network of
contacts, including its shareholders. Companies are valued with focus on their
replacement value, cash generation ability and balance sheet strength. During
the process, the Fund's goal is to examine a company both 'as it is' and under
the lens of 'as it could be' to maximise shareholder value.
Investments are normally made after an initial engagement, which in some cases
may have been preceded by the purchase of a modest position in the company, to
allow the Investment Adviser to meet the company as a shareholder. Engagement
includes dialogue with the company chairman, management and non-executive
directors, as we build a network of knowledge around our holdings. Where
appropriate, site visits are undertaken to deepen our research and independent
research is commissioned. Investee company annual general meetings are often
attended 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. Where value is hidden or trapped, the
Fund looks for ways to release it. The activist approach in some cases requires
long holding periods, which facilitate effective engagement.
Most of the Fund's activism takes place in private, but we are willing to make
our 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.
The opportunities for active investment are supported by a continued
improvement in the corporate governance of UK listed companies, and the
positive perception of active ownership in government reports such as the Kay
Review.
Investee Companies
Grainger plc ("Grainger")
Grainger was established in 1912 and is the UK's largest listed residential
property owner and manager. Its traditional reversionary business is based
predominantly on regulated tenancies, which provide substantial and predictable
cash flows. Its portfolio of 3,710 reversionary assets has a market value of GBP
1.3 billion. Properties revert vacant to Grainger after an average of ten
years. As these properties become vacant, Grainger estimates that they will
generate a surplus of GBP332 million. This reversionary surplus is the difference
between today's market value as a low yielding tenanted property compared to
the vacant possession value at today's prices. It does not reflect any future
benefit from house price inflation. This portfolio is expected to generate over
GBP100 million gross of cash each year until 2025. Grainger also owns 2,100 homes
as part of its market rented portfolio valued in excess of GBP0.5 billion. The
cash generated by the reversionary business is recycled into Private Rented
Sector ("PRS") residential developments.
We believe that Grainger's portfolio, providing visibility of cash realisations
through to 2025, represents an attractive asset for an insurance company
seeking to match this asset profile against long-term future liabilities.
Despite a recent reduction in the average cost of Grainger's GBP1.1 billion of
debt from 5.1 per cent to 4.6 per cent and more recently, to around 4 per cent,
we believe that in the current interest rate environment, there remains further
scope to secure better terms for shareholders. We have long believed that
annual administrative expenses of GBP35 million are excessive. This equates to an
administrative expense ratio of 3 per cent on GBP1.2 billion of net assets, which
is substantially higher than its peer group. In May 2016, Grainger announced
that an operational review had identified a minimum of GBP8.6 million in overhead
cost savings relative to September 2015, representing a reduction of 24 per
cent, which will reduce the 2017 overhead cost to GBP27.5 million.
Since first investing in June 2015, we have engaged with the Chairman, the CEO,
the outgoing executive team and other senior participants in the property
sector. We believe that our comments about the need to reduce both operating
and finance costs together with a tighter, more focused strategic direction
have been well received. In April 2016, Grainger announced that it was exiting
the majority of its German portfolio. The Fund regards this as a helpful first
step to refocus and simplify the company's structure.
The Fund continues to engage constructively with the management of Grainger in
an effort to address the opportunity to lower the operating and financial costs
of the company. The Fund believes there remains 'hidden' value that can be
released from the reversionary surplus that is associated with the portfolio of
regulated tenancies. In March 2015, this surplus was calculated by the company
as having a value of GBP451 million or 120p per share. However, in January 2016,
the sale of the equity release division included GBP179 million of these
surpluses, so the figure now stands at GBP332 million. As well as continuing
discussions with property market participants, the Fund is in active and
detailed dialogue with management regarding optimising structures. We note that
in July 2016, the company converted its PRS Fund, GRIP, into a Real Estate
Investment Trust and commented on the suitability of this structure for PRS
investment.
Hurricane Energy plc ("Hurricane")
Hurricane is an oil exploration company targeting naturally fractured basement
rock reservoirs in the West of Shetlands area. Hurricane has made two basement
reservoir discoveries, Lancaster and Whirlwind, each estimated to contain
approximately 200 million barrels of oil. The company also has approximately
440 million barrels of oil equivalent ("BOE") of prospective resources in its
portfolio of exploration opportunities. In 2014, it successfully drilled and
de-risked the Lancaster well and later in the year initiated a farm-out
process, seeking partners to fund the development of the asset.
Hurricane was co-founded in 2005 by Dr Robert Trice, its current CEO. It has
acquired licences, in which it maintains a 100 per cent working interest.
According to GeoScience, a research services firm, basement reservoirs could
hold as much as 20 per cent of the world's remaining oil and gas resources.
Naturally fractured rock with high permeability allows the oil to rise and
collect under a thick layer of shale rock and clay. Oil from this
unconventional source has been successfully extracted in locations such as
Vietnam and Yemen, but not yet in the UK. The fractures provide storage
capacity and fluid pathways. Hurricane chose to concentrate on proven systems
where previous operators had not progressed the discoveries, due to the view
(at the time) that these were not commercial.
Hurricane listed in February 2014, placing 41.9 million shares at 43p, valuing
the equity at GBP272 million. Oil prices, however, have fallen from US$109 at the
time of IPO to $49 at the end of June 2016. This has hit the value of all oil
and gas stocks, with the AIM sector index falling by 43 per cent over the year.
The oil price fall resulted in a dearth of capital for new projects, and delays
in farm-out discussions. In our view, Hurricane's assets stand out due to the
size of the resources. In comparison to Hurricane's resource size, the average
North Sea exploration target in 2014 was just over 30 million BOE, according to
UK Oil and Gas.
The Lancaster field was first drilled by Shell in 1974. It was drilled again by
Hurricane in 2009 and 2010, establishing that the reservoir contained light oil
in a permeable reservoir. In 2014, the company drilled a one-kilometre
horizontal appraisal well in the discovery, with results exceeding best
expectations and addressing identified risks. The key challenge overcome by
Hurricane has been to map accurately the fractures to target the wells
correctly and access production. The well has achieved a sustainable natural
flow rate of 5,300 Stock Tank Barrels ("STB") per day and a flow rate using
artificial lift of 9,800 STB per day, well over the 4,000 target. The flow
rates achieved were constrained by the surface equipment.
In April 2016, Hurricane announced a GBP52 million fundraising to drill two wells
in the Lancaster field over the summer of 2016. The Fund participated in the
placing, which attracted a new cornerstone investor, Kerogen Capital, an oil
specialist. Crystal Amber was also awarded three year warrants to subscribe for
up to 23.3 million shares at 20p per share.
In June 2016, Hurricane announced the suspension of its farm-out discussions as
it executes the drilling campaign and analyses the results. This is expected to
refine the resource range estimate, which is currently 62 to 456 million
barrels of oil. The campaign will also provide a second future production well.
In July Hurricane announced the spudding of its new exploration well in the
Lancaster field. We currently await the results of this drilling campaign.
In September 2016, Hurricane announced positive drilling results from its
Lancaster well indicating contingent resources significantly higher than
previous estimates of 200 million barrels, high flow rates (6,600 barrels of
oil per day), and good quality oil. The Fund believes that these results
materially de-risk the assets for further development. The share price rose
strongly to 38p. This compares with the Fund's average cost of 16p per share.
Pinewood Group plc ("Pinewood")
Pinewood is a leading international film and television studio with a history
dating back to the 1930s. It provides studio and services such as film
production, filmed TV and studio recording, digital content services and
facilities for media-related businesses. In addition, it sources and advises on
film, TV and video game opportunities.
In 2011, the Fund was Pinewood's largest shareholder and held the view that
Pinewood's iconic brand and technical excellence should have enabled it to
deliver higher profitability. Following a cash offer from Peel Holdings in
2011, the Fund sold its position realising a profit of GBP8.7 million.
In April 2015, Pinewood raised GBP30 million in order to fund Phase 1 of the
expansion of its UK studios. Having continued to follow Pinewood's
developments, the Fund used this as an opportunity to reinvest in the company,
acquiring an initial 4.1 per cent interest, on the back of its belief that
Pinewood could and should be able to deliver much higher levels of
profitability. The aim of this expansion was to increase capacity through the GBP
75 million Pinewood Studios Development Framework ("PSDF") in Buckinghamshire,
which could see Pinewood rival Hollywood sets.
On 30 June 2015, Pinewood announced its full year results to 31 March 2015.
While the company stated that it had delivered strong growth, the Fund noted
that of the GBP8.1 million of profit after tax, GBP3.1 million was derived from tax
credits and a further GBP1.1 million from Pinewood's share of results of joint
ventures. Revenue was GBP75 million.
In December 2015, the Fund proposed to Pinewood that it would pay for
management consultants to carry out work at Pinewood to recommend ways in which
profitability could be improved. In January 2016, the board of Pinewood
rejected the proposal.
In February 2016, Pinewood's board appointed Rothschild "to assist with a
strategic review of the overall capital base and structure, which could include
a sale of the company". The Fund felt that whilst the strategic review may
result in the release of value at Pinewood through a possible sale, this would
have been unnecessary had management run the business more efficiently.
In its full year results for the year ended 31 March 2016, Pinewood announced
that the first phase of PSDF "Pinewood East" was complete and part occupied.
The company also revealed increases of 10.9 per cent and 136.3 per cent in
group revenue and group operating profit respectively, on the previous year. In
April 2016, the Fund sold 400,000 shares at 557p per share, realising a profit
of GBP0.65 million.
After the year end, Pinewood received a takeover offer worth GBP320 million
(563.2p per share). The offer was made by Aermont Capital, a subsidiary of PW
Real Estate Fund, reinforcing Crystal Amber's view that Pinewood's real estate
portfolio was dramatically undervalued. At 30 June 2016 the Fund held 3.2
million Pinewood shares equal to 5.7 per cent of Pinewood's issued share
capital, with a cost of GBP12.8 million. At 563.2p per share, this would value
the Fund's holding at GBP18.3 million, a return of 43 per cent since investing in
April 2015, bringing the Fund's total gains to GBP6.1 million on this investment.
We expect proceeds from the sale of the company to be received during October
2016.
Northgate plc ("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 operates a flexible rental strategy offering van hire 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 vehicles to their requirements and have the
flexibility to change vehicles as their needs evolve.
Northgate serves businesses that vary in size from owner operators to corporate
customers. Customers operate across a wide range of industries of which
construction and distribution are two of the largest. Other major sectors
include local authorities, manufacturing and engineering, public utilities,
retailers and wholesalers and a range of business services. The company
employs over 2,800 people across the group.
In September 2012, Crystal Amber invested in Northgate and following successful
engagement, exited the position in April 2015, realising a return of 51 per
cent on an investment of GBP7 million (gain of GBP3.5 million). Since then,
Northgate's share price has fallen by approximately 50 per cent. This
represented a discount to the net asset value as at 30 April 2016 and a yield
of in excess of 5 per cent (based on the proposed final dividend of 10.9p per
share). On 1 July 2016, the Fund disclosed that it had acquired 3 per cent of
the issued share capital of Northgate.
After the year end, in July 2016, the Fund also disclosed that Crystal Amber's
investment adviser had met with Bob Contreras, Chief Executive of Northgate,
following which it had written to Northgate, setting out its assessment of the
company's prospects together with suggested actions
so that stakeholders can better capitalise on the Northgate brand, market
positioning, strong cash generation and balance sheet strength. Amongst its
proposals, Crystal Amber requested that Northgate carry out a strategic review
to include a potential sale of all or part of the business.
Later in July 2016 the Fund met with Andrew Page, Chairman of Northgate where
it was able to discuss its specific proposals. The meeting was constructive and
the Fund awaits developments.
Leaf Clean Energy Company ("Leaf")
Leaf is an investment company focused on clean energy, largely in North
America.
The Fund initially invested in Leaf in October 2013, when the shares were
trading at a 45 per cent discount to their then net asset value. In our view,
this was the result of a poor investment track record, the scale of annual
running costs and the minimal visibility of investments.
Some of these investments are attractive, notably the convertible investment in
Invenergy Wind ("Invenergy"). It was acquired for $40 million and now accounts
for more than half the value of the portfolio. Invenergy is North America's
largest wind power generation company, and has developed more than 8,000 MW of
renewable and natural gas power generation and energy storage facilities.
Following engagement with the Leaf board, the Investment Manager took decisive
action to change the leadership of the company. We requisitioned an EGM to
remove the chairman and the executive director and proposed that Mark Lerdal
became executive chairman, with a clear mandate to realise the investments in
an orderly manner. An incentive package was agreed, centred on the cash
returned to shareholders. Leaf's board agreed the changes, and the new board
began steps to realise assets. It cut additional funding to MaxWest, realising
a $17.2 million loss. It has disposed of Multitrade Rabun Gap, Multitrade
Telogia, SkyFuel and Johnstown Regional Energy realising $8.4 million in cash,
only $0.7 million below their carrying value. Running costs have been reduced
to $2.5 million per annum (previously c.$5.9 million). In March 2015,
management said it is likely to take two years to realise all its investments.
In July 2016, Leaf announced a favourable preliminary decision in its lawsuit
against Invenergy for breach of contract. Leaf is seeking payment of $126
million, equating to 79.4p per share, which compares to Leaf's share price at
30 June 2016 of 34.5p.
The Fund remains confident in the value of the Invenergy investment, despite
the disappointing valuations announced in May 2016. The average of the two
fair value appraisals was $55 million, short of the $97 million carrying value.
In its Interim Report, the company declared its NAV at 31 December 2015 to be
US$109 million or 92c (c.71p) per share. Using the average of the two
appraisals, Leaf's NAV at 31 December stood at US$74.4 million or 63c (c.49p)
per share which compares to the Fund's average cost per share of 34p. The Fund
holds 35.3 million shares in Leaf.
We remain confident that Leaf will successfully realise the value in its core
holdings and return cash to shareholders. According to recent valuations, this
has the potential to be well in excess of the current share price.
STV Group ("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. As a
licensed operator, STV has good visibility of revenues and costs.
The company has exclusive access to ITV Network's material in Scotland in
return for an affiliate fee that represents around 50 per cent of STV's cost
base. ITV controls about 45 per cent of TV advertisement sales in the UK, so
STV has engaged it to sell its national airtime. STV's national airtime
revenues are linked to the content's success, that is, its viewing performance
relative to other channels. STV's peak time share has remained above ITV's for
five consecutive years. STV generates 65 per cent of its GBP120 million revenues
from national airtime advertising, and 10 per cent from Scottish airtime
advertising. Nearly 90 per cent of its GBP20 million operating profits come from
advertising and sponsorship. Over the last decade, and despite the rapid growth
of digital advertising, TV's share of the advertising market has remained
broadly stable at 40 per cent of total spend, and similarly TV viewing has
remained stable at an average of around 4 hours per day.
By 2010, all of STV's non-television assets had been sold off. From its past,
STV retained hefty tax losses and a legacy pension deficit from an acquired
company. New management set a clear strategy of optimising the TV operation and
growing TV production and digital revenues. STV produces over 160 hours of TV
content for external commissions. Whilst this might be a necessary component of
a broadcaster, it has so far failed to make a material contribution to profits.
Digital revenues have made more progress. With the goal to further its
consumer engagement and reach different demographics, STV has developed a
family of products which complement on-air TV, including its own on-demand
player, live online TV, local TV and city apps. Unlike other broadcasters who
developed their own players at great expense, STV partnered with third party
providers at a much lower cost. STV's digital products have captured data
insights from around 20 per cent of Scotland's population. The company has
started monetising this data and digital, principally from the STV Player, now
contributes 4 per cent of group revenues and 8 per cent of operating profits.
It is expected to continue growing, as broadcasters are well positioned to
capture online video advertising revenues leveraging their quality video
content.
In 2014, STV announced an accelerated deficit recovery plan to cut the deficit
on its defined benefit pension schemes over 11 years as opposed to 18 years.
The deficit was GBP83 million in March 2014, down from GBP135 million in 2012.
This reduction was due to increases in asset values as well as payments that
STV made during the period. STV agreed with the trustees to make a payment of
GBP7-7.5 million per year over the next 10 years to the end of 2025, to reduce
the deficit.
Last year, STV set new targets for 10 per cent annual earnings per share growth
for the next three years. Scotland's Independence referendum in 2014 placed
STV at the centre of political events, and reinforced its brand.
The share price de-rated following the EU Referendum result and concerns over
economic growth. However, after the year end, STV's share price recovered
beyond pre Brexit levels and in August 2016, the company announced positive
half year results with continued revenue growth (up 5 per cent), a double digit
increase in EBITDA/EPS/dividends and net debt down 17 per cent. In our view,
dividend growth is likely to accelerate and the market capitalisation of GBP121
million (at 30 June 2016) fails to reflect the quality of this asset.
The Fund maintains the view that STV holds a valuable franchise with
opportunities to expand its production activities. Over the year, the Fund has
increased its holding to 7.8 per cent (6.7 per cent as at 30 June 2015).
FairFX Group plc ("FairFX")
FairFX is an international payment services provider, offering services to
customers in the UK since 2007. The Group has developed a cloud-based payments
platform that enables personal and business customers to make easy, low-cost
multi-currency payments in a broad range of currencies and countries and across
a range of foreign exchange products via one integrated system.
The FairFX platform facilitates payments either direct to bank accounts or at
over 30 million merchants and over 30 million ATMs globally via Mobile apps,
the Internet, SMS, wire transfer and MasterCard/VISA debit cards.
We met management for IPO pre-marketing in April 2014, at which time the
company explained that they needed to raise cash to spend on marketing, prior
to the summer holiday season. However, the IPO did not take place until August
2014, mid-way through the holiday season, and the company only raised GBP2.6
million. The placing was at 45p, valuing the business at GBP30 million. The
Fund feels that shareholders were unrealistic with regards to FairFX's
valuation and as a result, shareholders have delayed the investment required in
order to accelerate growth.
In December 2014, the company placed new shares at 58p to raise GBP1.5 million in
order to fund additional marketing for 2015. FairFX demonstrated strong growth
on the back of the additional marketing spend and in November 2015 undertook a
further placing of 5.3 million new shares at 31p to raise GBP1.5 million (well
below the target of GBP3-5 million). The goal had been to raise sufficient funds
in order that the company might continue to expand its Corporate Business
marketing and re-launch in March 2016. The Fund felt that with sufficient
investment in marketing, FairFX would see a re-rating, as it had previously
demonstrated strong growth on the back of such investment. Since the year end
FairFX has further increased its profile by agreeing partnership deals with
both the Monarch airline group and Leicester City FC.
During the year, the Fund engaged with the company's board to undertake a
placing that would fund increased marketing expenditure for growth. The
placing was at 20p and it took place in March 2016 as the overhang from a
former executive was cleared. The Fund believes that the combination of
clearing this overhang and increasing marketing capabilities should see a
re-rating of the stock. At 30 June 2016, the Fund held 25.7 million shares and
the company's share price was 31.8p per share. The Fund was also awarded three
year warrants to subscribe for up to 7.5 million new Ordinary Shares at a price
of 27p per share in exchange for the Fund's added contribution through
engagement with the company.
Sutton Harbour Holdings plc ("Sutton Harbour")
Sutton Harbour owns and operates Sutton Harbour in the Barbican, Plymouth's
historic old port. This includes a leisure marina, the second largest fresh
fish market in England and an estate of investment properties around the
harbour.
During the early 2000s, the company expanded into air transport, acquiring a
long lease for Plymouth City Airport and operating airline routes through a new
subsidiary, Air Southwest. The
airline turned lossmaking and was sold in 2010. In 2011, Plymouth City Council
agreed to the closure of the airport.
Having been investors since February 2010, by 2011, we were dissatisfied with
the pace of progress and believed that decisive action was required. At Sutton
Harbour's AGM in 2011, the Fund assisted in voting down the directors'
authority to allot shares, to signal our view that action was needed. Following
this, the Sutton Harbour board announced the departure of the CEO. In December
2011, Sutton Harbour proceeded with a GBP6 million equity fund raise, at a 57 per
cent discount to the then net asset value. We engaged intensely both on the
terms of the raising and the importance of avoiding higher risk projects. As a
result of the fundraising, the Fund's stake in Sutton Harbour increased to 25
per cent.
The fundraise allowed Sutton Harbour to build its new marina in Millbay and to
make a modest investment to reconfigure berths in Sutton Harbour to cater for
larger vessels. In our view, growing the berthing capacity has strengthened
Sutton Harbour as a leisure destination in the South West. The company also
made progress in disposing of non-core property assets, as suggested by the
Fund.
Since 2013, Sutton Harbour has remained focused on its waterfront assets,
maintaining annuity revenues at its core marina and growing revenues at the
newly built King Point. It has identified ways to grow revenues with the
'Destination Sutton Harbour' initiative, which markets the marina as a
destination of national significance. The company is exploring ways to reduce
its GBP21.5 million net debt through the sale of development inventory. The Fund
is also keen for Sutton Harbour to generate value from the airport site.
At the end of June 2016, Sutton Harbour announced its full year results for the
year to 31 March 2016, revealing a doubling of pre-tax profits to GBP1.6 million
and flat net assets of GBP40.9 million (31 March 2015: GBP40.5 million),
representing an NAV per share of 42.4p (share price at June 2016: 28.6p per
share) compared to the Fund's average cost per share of 25p.
Despite the re-rating of the shares, Sutton Harbour continues to trade at a
significant discount (c.32.5 per cent) to NAV. In April 2016, Sutton Harbour
appointed Rothschild to carry out a strategic review of the company, which
could include a sale of the company. We await further developments on the
strategic review.
Restaurant Group plc ("Restaurant Group")
Restaurant Group operates over 500 restaurants and pubs in the UK's casual
dining sector, with a plan to double in size over the next 8 to 10 years.
The company serves over 43 million meals each year through its brands which
include Frankie & Benny's, Chiquito, Coast to Coast, Garfunkel's, Brunning &
Price and Joe's Kitchen. Restaurant Group also operate a concessions business
which trades over 60 outlets across more than 30 brands, primarily in UK
airports.
In its March 2016 interims, Restaurant Group reported like-for-like ("LFL")
sales down 1.5 per cent and in April reported LFL sales down 4.5 per cent in
the previous seven weeks. This was attributed to weaker performance at the
company's leisure sites due to lower footfall and greater competition.
Restaurant Group is a strongly performing growth stock that has experienced
issues with its investment thesis over the last six months. However,
Restaurant Group remains a cash generative business with a good foot-print
across the UK. After the year end, in August 2016, Restaurant Group announced
that its CEO would step down after a strategic review recommended that the
company appoint a new CEO. In September 2016, Andy McCue, the former Chief
Executive of bookmaker, Paddy Power, will step in as Restaurant Group's new
CEO.
Following the publication of its interim report on 26 August 2016 and a strong
share price appreciation, the Fund has sold its holding in Restaurant Group.
Hansard Global plc ("Hansard")
Hansard is a life insurance company based in the Isle of Man and specialising
in long-term savings products. It writes policies in over 150 countries via a
network of more than 500 independent financial advisers and administers over
$1.2 billion for its policyholders. Its core customers are affluent individuals
looking to place their savings away from their home country. 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). There is little of the insurance risk associated with
annuities or with-profits books of business.
Hansard had traditionally been a nimble operator, prioritising high margins
over volume growth with a targeted distribution strategy. It listed in 2006,
with a growth investment case focused on tapping the demand for savings
products from the world's growing affluent middle class. In 2007 it reported GBP
35 million of new annual premium equivalent business, a number that would be
its all-time high. Its new business margins, however, held at high single
digit, versus low single digits for domestically focused UK peers, until 2013,
when they peaked at 12 per cent.
High dividends had previously been paid out of cash reserves, but in 2013, an
unexpected cut in the dividend disappointed investors and resulted in a
sell-off of its shares. The Fund took advantage of the resultant share price
weakness to acquire a holding. At the year end, Hansard was trading at around
40 per cent discount to embedded value and generating an eight per cent
dividend yield.
The Fund has since maintained a patient engagement with its board and
management. It has encouraged the renewal of the board, and the move to a
growth strategy that would leverage the company's IT capabilities with
economies of scale.
The strengthening of the management team has seen the arrival of a new Finance
Director and a new head of sales. 2014 and 2015 were years of change and
investment. 2016 has seen evidence that the new strategy is succeeding, with
sales doubling from 2015's low base. The growth has come from most geographies
and has resulted in positive new business margins.
The company trades at a 24 per cent discount to the expected embedded value as
at 30 June 2016 (GBP142.9 million market cap on 30 June 2016 v. GBP188 million).
With sales momentum continuing into 2016, the Fund believe this discount will
close as the company's sales strategy continues to gain traction.
Realisations
The Fund's total net realised gains since inception now amount to GBP53.4
million. Previous profitable exits include Aer Lingus, Thorntons, Pinewood
Shepperton, 3i Quoted Private Equity, Delta, Kentz Corporation Limited, Tate &
Lyle and Chloride Group.
Outlook
Although UK equity markets have recovered strongly after the initial reaction
to the referendum result, the Fund remains cautious on the overall outlook for
markets, particularly as the long term impact of "Brexit" remains uncertain.
However, we believe "Brexit" will also create activist opportunities for the
Fund as companies adjust to the new environment.
We feel the Fund is less exposed to broader market conditions with its focus on
special situations where it sees the potential to act as a catalyst to realise
shareholder value. The Fund's holdings of put options also provide protection
against a significant market sell-off.
Crystal Amber Asset Management (Guernsey) Limited
12 September 2016
Investing Policy
Crystal Amber Fund Limited (the "Company" or the "Fund") is an activist fund
which aims to identify and invest in undervalued companies and, where
necessary, take steps to enhance their value. The Company aims to invest in a
concentrated portfolio of undervalued companies which are expected to be
predominantly, but not exclusively, listed or quoted on UK markets (usually the
Official List or the Alternative Investment Market ("AIM")) and which have a
typical market capitalisation of between GBP100 million and GBP1,000 million.
Following investment, the Fund and its advisers will also typically engage with
the management of those companies with a view to enhancing value for all their
shareholders.
Investment objective
The Fund's objective is to provide its shareholders with an attractive total
return, which is expected to comprise primarily capital growth but with the
potential for distributions from realised distributable reserves, including
distributions arising from the realisation of investments, if this is
considered to be in the best interests of its shareholders.
At the date of signing of these financial statements the investment strategy
and investment restrictions which applied to the Company following Admission
and after the passing of Resolution 1 at the EGM held on 15 August 2013, were
as follows:
Investment strategy
The Fund focuses on investing in companies which it considers are undervalued
and will aim to promote measures to correct the undervaluation. In particular,
it aims to focus on companies which the Company's Investment Manager and
Investment Adviser believe may have been neglected by fund managers and
investment funds due to their size; where analyst coverage is inadequate or
where analysts have relied on traditional valuation techniques and/or not fully
understood the underlying company. The Fund and its advisers seek the
co-operation of the target company's management in connection with such
corrective measures as far as possible. Where a different ownership structure
would enhance value, the Company will seek to initiate changes to capture such
value. The Company may also seek to introduce measures to modify existing
capital structures and introduce greater leverage and/or seek divestiture of
certain businesses of the investee company.
Pending investment of the type referred to above, the Company's funds will be
placed on deposit but the Company also has the flexibility to make other
investments which are considered to be reasonably liquid in order to ensure
that its funds are appropriately deployed (including in money market
instruments). The Company may, in certain circumstances, acquire stakes in
target companies from investors in exchange for Shares in the Company.
Where it considers it to be appropriate the Company may (i) utilise leverage
for the purpose of investment and enhancing returns to Shareholders and/or (ii)
enter into derivative transactions, for example to provide portfolio protection
against significant falls in the market or for the purposes of efficient
portfolio management, in seeking to manage its exposure to interest rate and
currency fluctuations through the use of currency and interest rate hedging
arrangements, and to acquire exposure to target companies through contracts for
difference.
Investment restrictions
It is not intended that the Company will invest, save in exceptional
circumstances, in:
· companies with a market capitalisation of less than GBP100 million at the
time of investment;
· pure technology based businesses; or
· unlisted companies or companies in pre-IPO situations.
It is expected that no single investment in any one company will represent more
than 20 per cent of the Gross Asset Value of the Company at the time of
investment. However, there is no guarantee that this will be the case after any
investment is made, or where the Investment Manager believes that an investment
is particularly attractive.
Dividend Policy
With effect from 1 January 2015, the annual target dividend was increased to 5p
per share. The Company's investment objective and strategy means that the
timing and amount of investment income cannot be predicted and the level of
dividend receipts will vary based on the composition of the portfolio from time
to time. There can therefore be no guarantee as to the timing and amount of any
distribution payable by the Company, although it is the intention of the Board
of Directors (the "Board") to distribute a proportion of the dividends received
to shareholders from the Fund's realised distributable reserves and to make
distribution payments arising from the realisation of investments if considered
to be in Shareholders' interests.
Composition of the portfolio
The Board, Investment Manager and Investment Adviser believe that the number of
potential target companies is high with more than 2,000 companies quoted on AIM
or the Official List and they consider that a significant number of these are
in the Fund's targeted range.
Target investee companies typically operate in one or more of the following
sectors:
· consumer products;
· industrial products;
· retail;
· support services;
· healthcare; or
· financial services.
However, the Fund is in no way restricted to these sectors and investment
decisions are taken based on market conditions and other investment
considerations at the time.
Report of the Directors
Incorporation
The Company was incorporated on 22 June 2007 and the Company was admitted to
trading on the Alternative Investment Market ("AIM") on 17 June 2008.
Principal activities
The Company is a Guernsey registered closed ended company established to
provide shareholders with an attractive total return, which is expected to
comprise primarily capital growth and distributions from accumulated retained
earnings taking into consideration the unrealised gains and losses at that
time. This will be achieved through investment in a concentrated portfolio of
undervalued companies which are expected to be predominantly, but not
exclusively, listed or quoted on United Kingdom ("UK") markets and which mostly
have a market capitalisation of between GBP100 million and GBP1,000 million.
The Company became a member of The Association of Investment Companies ("AIC")
on 26 March 2009.
Business review
A review of the business together with the likely future developments is
contained in the Chairman's Statement and the Investment Manager's Report.
Results and dividend
The results for the year are set out in the Statement of Profit or Loss and
Other Comprehensive Income below.
On 7 July 2015, the Company declared an interim dividend of GBP2,314,807,
equating to 2.5p per ordinary share, which was paid on 14 August 2015 to
shareholders on record on the register on 17 July 2015.
On 13 January 2016 the Company declared an interim dividend of GBP2,475,044,
equating to 2.5p per ordinary share, which was paid on 19 February 2016 to
shareholders on record on the register on 22 January 2016.
Subsequent to the year end, on 14 July 2016, the Company declared an interim
dividend of GBP2,460,369, equating to 2.5p per Ordinary share, which was paid on
19 August 2016 to shareholders on record on the register on 22 July 2016.
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.
Long term viability
As further disclosed below, the Company is a member of the AIC and complies
with the AIC Code of Corporate Governance (the "AIC Code") which was revised in
February 2015 to reflect changes to the UK Corporate Governance Code published
by the Financial Reporting Council (the "FRC Code"). In accordance with the
revised AIC Code, the Directors have made a robust assessment of the prospects
of the Company over the three year period ending 30 June 2019. The Directors
consider that three years is an appropriate period to assess the viability of
the Company given the average length of investment in each portfolio company
and the time horizon over which investment decisions are made.
In considering the prospects of the Company, the Directors have considered the
risks facing the Company, giving particular attention to the principal risks
identified below, the effectiveness of controls over those risks, and have
evaluated the sensitivities of the portfolio to market volatility.
The Directors have also considered the Company's income and expenditure
projections over the three year period, the fact that the Company currently has
no borrowings and that most of its investments comprise readily realisable
securities which can be expected to be sold to meet funding requirements if
necessary.
Based on the results of this analysis the Directors have a reasonable
expectation that the Company will be able to continue in operation and meet its
liabilities as they fall due over the three year period of their assessment.
The Directors have based this assessment on the assumption that the resolution
that the Company cease to continue in operation as constituted in 2017 is not
passed.
Principal risks and uncertainties
In the normal course of business, the Company has a rigorous risk management
framework including a comprehensive risk matrix that is reviewed and updated
regularly. The Investment Manager has created a risk committee and the Board
receives quarterly reports from that committee. The Board has recently asked
one of the Company's directors, Nigel Ward, to liaise with the risk committee,
and to attend its regular meetings, to offer an independent view and to enhance
communication between the committee and the Board. The Directors have carried
out a robust assessment of the principal risk areas relevant to the performance
of the Company and these are detailed below. As it is not possible to eliminate
risks completely, the purpose of the Investment Manager's risk management
policies and procedures is to reduce risk and to ensure that the Company is as
adequately prepared as reasonably possible to respond to such risks and to
minimise their impact should they occur.
Regulatory Risk
A breach of regulatory rules could lead to a suspension of the Company's stock
exchange listing or financial penalties. The Company Secretary monitors the
Company's compliance with the Listing Rules in conjunction with the Nominated
Adviser and compliance with these rules is reviewed by the Directors at each
Board meeting.
One of the most significant regulatory risks for an activist investor such as
the Company is in relation to market abuse provisions. The Financial Conduct
Authority ("FCA") has published guidance that in general it would not consider
an activist shareholder's conduct to amount to market abuse where the
shareholder merely carried out acquisitions of the target company's securities
on the basis of its intentions and knowledge of its strategy. However, the FCA
has stated that if, for example, other shareholders trade in the target's
shares on the basis of another shareholder's strategy, they may view such
conduct as amounting to market abuse. There is no guarantee that other
shareholders will not follow the Company's strategy, and, in certain
circumstances the Company may act with, or be dependent upon, the support of
other shareholders to implement its strategies. There is also no guarantee that
the FCA's guidance will not change. The Company and the Advisers operate in a
highly regulated environment and whilst they will always seek to take
appropriate professional advice, there is a risk of an inadvertent breach of
securities laws or regulations, or allegations of such breach, taking place.
The following risks, whilst they may affect the performance of the Company,
will not in themselves affect the ability of the Company to continue to
operate.
Investment Risk
The Company's ability to generate attractive returns for shareholders depends
upon the Investment Adviser's ability to assess future values that can be
realised in connection with investments. The ability to assess future values
and the timing thereof, whether in connection with the making of an investment
or exiting from an investment, may be particularly important in the case of
investments over which the Company has little or no control on its own. The
ability of the Company to exit certain investments on favourable terms will be
dependent (inter alia) upon the successful implementation of the strategic
plans for such investee company and, in particular, the ability to persuade
management to adopt such strategic plans. It will also depend on the relative
liquidity of the stock of the investee company at that time.
Market Risk
The Company's investments include investments in companies the securities of
which are publicly traded or are offered to the public. The market prices and
values of these securities may be volatile and are likely to fluctuate due to a
number of factors beyond the Company's control, including actual and
anticipated fluctuations in the quarterly, half yearly and annual results of
the
companies in which investments are made and other companies in the industries
in which they operate, market perceptions concerning the availability of
additional securities for sale, general economic, social or political
developments, changes in industry conditions, shortfalls in operating results
from levels forecast by securities analysts, the general state of the
securities markets and other material events, such as significant management
changes, refinancings, acquisitions and disposals. Changes in the values of
these investments may adversely affect the Company's NAV and cause the market
price of the Company's shares to fluctuate. The Company hedges price risk by
holding put options linked to the FTSE index to provide some protection against
a significant market sell-off.
Operational Risk
The Company's business model involves the delegation of responsibilities to
several external parties in order to operate on a day-to-day basis. The Company
is dependent on the diligence, skill and network of the Investment Adviser, its
senior management and business contacts. The loss of the services of the
Investment Adviser and/or the Investment Manager may have a material adverse
effect on the future of the Company's business. All parties including the
Investment Manager, Investment Adviser, Administrator and the Custodian must
follow agreed processes and are subject to regular monitoring, as well as an
annual review of effectiveness by the Board.
'Key Man' Risk
The Investment Adviser and the Investment Manager rely heavily on the
expertise, knowledge and network of Richard Bernstein when sourcing investment
opportunities. He is a shareholder of the Company, a director and shareholder
of the Investment Manager and a member of the Investment Adviser, and the loss
of him to these service providers could have an adverse effect on the Company's
performance. In the absence of Richard Bernstein, the Board and Manager have
sufficient relevant experience to manage the Company's portfolio while
considering the future of the Company and, in particular, the potential for the
current activist strategy to continue. Key Man risk is covered in the
Investment Adviser's continuity plan. The Board is aware of this risk and
continues to discuss possible strategies to mitigate its impact.
Stock Concentration Risk
By its very nature as an activist fund, the Company is exposed to the risk that
its portfolio of investee companies is not sufficiently diversified to absorb
the impact of a major investment falling in value. As noted in the Investment
Policy, the Company seeks to invest in companies and use activism to unlock
value. An inherent consequence of this policy is a portfolio concentrated on a
number of key investee companies. The Board is aware of this risk and feel it
is a necessary risk to take in order to provide returns through the investment
strategy. Levels of investment in individual companies are monitored and
parameters are set to ensure that the risk is kept to an acceptable level,
while also ensuring a sufficiently high level of stock is purchased to allow
engagement as a major shareholder, if required.
Shareholder Concentration Risk
A total of 7 investors holding 3 per cent or more each of the shares of the
Company hold a combined 86.7 per cent of the voting rights. A significant
shareholder seeking liquidity could have a negative impact on the Company
through movements in Company share price, through voting at an AGM, or by
placing pressure on the Board to act to realise value in the portfolio at a
time and value other than the optimum. To manage this risk the Investment
Manager maintains regular contact with significant shareholders to discuss the
performance of the Fund and any views the shareholder may have.
The above risks are mitigated and managed by the Board through continual
review, policy setting and updating of the Company's risk matrix to ensure that
procedures are in place with the intention of minimising the impact of the
above mentioned risks.
Further detail on the Company's risk factors is discussed in the Company's
prospectus, available on the Company's website (http://www.crystalamber.com)
and should be reviewed by shareholders.
Details about the main risks associated with the Company's investment portfolio
and the way they are managed are given in note 14 to the financial statements.
Directors
The Directors of the Company who served during the year and up to the date of
this report are shown below. Biographies of the Directors holding office as at
30 June 2016 and at the date of signing these financial statements are shown
below.
Directors' interests
The interests of the Directors in the share capital of the Company at the year
end and as at the date of this report are as follows:
2016 2015
Number of Total Number of Total
Ordinary Voting Ordinary Voting
shares Rights shares Rights
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%
Directors' remuneration
During the year the Directors earned the following remuneration in the form of
Directors' fees from the Company:
2016 2015
GBP GBP
William Collins 35,000 34,966
Sarah Evans 30,000 29,969
Nigel Ward 29,750 24,973
Christopher Waldron 25,000 25,000
Total 119,750 114,908
During the year, Nigel Ward received a one-off fee of GBP3,500 for services
undertaken in respect of assisting the Investment Manager during 2015 to
establish the risk committee with the appropriate terms of reference. With
effect from 1 January 2016, Nigel Ward received an increase in remuneration of
GBP2,500 to reflect additional services provided to the Fund in respect of
managing risk as detailed above.
In the prior year each Director received an additional, one-off fee of GBP5,000
for services provided relating to the placement of shares on 27 January 2015.
Substantial interests
As at 8 August 2016, the Company has been notified of the following voting
rights of 3 per cent or more of its total voting rights:
Number of Total
Ordinary Voting
Shares Rights
Invesco Perpetual 28,305,510 28.76%
Woodford Investment Management 15,764,788 16.02%
Wirral BC 12,938,214 13.15%
Baring Asset Management 11,190,681 11.37%
Aviva Investors 8,654,807 8.79%
Rathbones 4,454,528 4.53%
Crystal Amber Asset Management (Guernsey) 4,015,606 4.08%
Total 85,324,134 86.70%
Statement of Directors' responsibilities
The Directors are responsible for preparing the Report of the Directors and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law they have elected to prepare the financial
statements in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board ("IASB") and applicable
law.
The financial statements are required by law to give a true and fair view of
the state of affairs of the Company and of the profit or loss of the Company
for that period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable and prudent;
· state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
· prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and to enable them to ensure that the financial statements comply with
the Companies (Guernsey) Law, 2008. They have general responsibility for taking
such steps as are reasonably open to them to safeguard the assets of the
Company and to prevent and detect fraud and other irregularities. The Directors
are responsible for ensuring that the Annual Report and Audited Financial
Statements, taken as a whole, are fair, balanced, and understandable and
provide the information necessary for shareholders to assess the Company's
performance, business model and strategy.
The Directors are also responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website and for
the preparation and dissemination of financial statements. Legislation in the
United Kingdom and Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Disclosure of information to the Auditor
The Directors each confirm that they have complied with the above requirements
in preparing the financial statements. They also confirm that so far as they
are each aware, there is no relevant audit information of which the Company's
auditor is unaware and that they have taken all the steps they ought to have
taken as Directors to make themselves aware of any relevant audit information
and to establish that the Company's auditor is aware of that information.
Corporate governance
As a Guernsey registered company, whose share capital is admitted to trading on
the AIM, the Company is not required to comply with the UK Corporate Governance
Code published by the Financial Reporting Council (the "FRC Code") (available
from the Financial Reporting Council's website, www.frc.org.uk). The FRC Code
became effective for reporting periods beginning on or after 29 June 2010 and
has been updated for periods beginning on or after 1 October 2014. However, the
Directors recognise the value of sound corporate governance and it is the
Company's policy to comply with best practice on good corporate governance that
is applicable to investment companies.
The Board considered the principles and recommendations of the AIC Code of
Corporate Governance (the "AIC Code") and decided to follow the AIC's Corporate
Governance Guide for Investment Companies (the "AIC Guide") dated October 2010.
The AIC Code and AIC Guide were updated in February 2015 to take into account
the updated FRC Code, and the Company has used this revised AIC Code and AIC
Guide for the financial year ended 30 June 2016.
The Guernsey Financial Services Commission ("GFSC") Finance Sector Code of
Corporate Governance (the "GFSC Code") came into force in Guernsey on 1 January
2012. Under the GFSC Code, the Company shall be deemed to satisfy the GFSC Code
provided that it continues to conduct its governance in accordance with the
requirements of the AIC Code.
The Company adheres to a Stewardship Code adopted from 14 June 2016. The
Company Stewardship Code incorporates the principles of the UK Stewardship Code
published by the Financial Reporting Council in July 2010 and revised in
September 2012. A copy of the Stewardship Code is available through the
Company's website www.crystalamber.com.
The Board comprises four Non-Executive Directors, all of whom are considered to
be independent of the Investment Manager and Investment Adviser and free from
any business or other relationship that could materially interfere with the
exercise of their independent judgement. Board appointments are considered by
all members of the Board and have been made based on merit, against objective
criteria.
The Board monitors developments in corporate governance to ensure the Board
remains aligned with best practice especially with respect to the increased
focus on diversity. The Board acknowledges the importance of diversity,
including gender, for the effective functioning of the Board and commits to
supporting diversity in the boardroom. It is the Board's ongoing aspiration to
have a well diversified membership; in addition to gender diversity, the Board
also values diversity of business skills and experience which bring a wide
range of perspectives to the Company.
The Chairman of the Board is William Collins. In considering the independence
of the Chairman, the Board has taken note of the provisions of the AIC Code
relating to independence, and has determined that Mr Collins is an independent
director. The Company has no employees and therefore there is no requirement
for a Chief Executive.
A biography for the Chairman and all the other Directors follows in the next
section, which sets out the range of investment, financial and business skills
and experience represented. The Directors believe that the current mix of
skills, experience, ages and length of service represented on the Board are
appropriate to the requirements of the Company.
Internal evaluation of the Board, the Committee and individual Directors is
undertaken on an annual basis in the form of peer appraisal, questionnaires and
discussions to determine the effectiveness and performance in various areas as
well as the Directors' continued independence.
The AIC Code recommends that a board should appoint one independent Non
Executive Director to be the Senior Independent Director. Sarah Evans is the
Senior Independent Director to the Company and fulfils the role of deputy
chairman and takes the lead in the annual evaluation of the Chairman.
In view of the Board's non-executive nature and the requirement of the Articles
of Incorporation that one third of Directors retire by rotation at least every
three years, the Board considers that it is not appropriate for the Directors
to be appointed for a specified term as recommended by principle 3 of the AIC
Code. At the forthcoming Annual General Meeting, William Collins and
Christopher Waldron will be retiring and offering themselves for re-election.
Any Director who has held office with the Company, for a continuous period of
nine years or more at the date of the Annual General Meeting, shall retire from
office and may offer themselves for re-appointment by the members. The Company
will consider whether there is any risk that such a Director might reasonably
be deemed to have lost independence through such long service. The Board
considers its composition and succession planning on an ongoing basis. Whilst
two Directors were appointed over nine years ago, the Fund commenced operations
in June 2008, i.e. less than nine years ago and we do not consider that the
effective nine year tenure point has been reached yet. We confirm that all
Directors are independent and that next year any Directors intending to
continue after their nine year anniversary will put themselves forward for
re-election then and annually thereafter if appropriate.
None of the Directors has a contract of service with the Company. The Company
has no executive Directors and no employees. However, the Board has engaged
external companies to undertake the investment management, administrative and
custodial activities of the Company. Clearly documented contractual
arrangements are in place with these companies which define the areas where the
Board has delegated certain responsibilities to them, but the Board retains
accountability for all delegated responsibilities.
Board responsibilities
The Board is responsible to Shareholders for the overall management of the
Company. The Board has adopted a set of reserved powers which set out the
particular duties of the Board. Such reserved powers include decisions relating
to the determination of investment policy and oversight of the Manager and
their advisers, strategy, risk assessment, Board composition, capital raising,
statutory obligations and public disclosure, financial reporting and entering
into any material contracts by the Company.
The Directors have access to the advice and services of the Administrator and
Secretary, who are responsible to the Board for ensuring that Board procedures
are followed and that it complies with Guernsey Law and applicable rules and
regulations of the GFSC and the London Stock Exchange. Where necessary, in
carrying out their duties, the Directors may seek independent professional
advice at the expense of the Company.
The Company maintains appropriate directors' and officers' liability insurance
in respect of legal action against its Directors on an ongoing basis.
Investment Advisory services are provided to the Company by Crystal Amber
Advisers (UK) LLP through the Investment Manager. The Board is
responsible for setting the overall investment policy and has delegated the
day to day implementation of the Company's strategy to the Investment Manager
but retains the responsibility to ensure that adequate resources of the Company
are directed in accordance with their decisions. The Board monitors the actions
of the Investment Adviser and Investment Manager at regular Board meetings. The
Board has also delegated administration and company secretarial services to
Heritage International Fund Managers Limited ("HIFM") but retains
accountability for all functions it delegates.
The Directors are responsible for ensuring the effectiveness of the internal
controls of the Company which are designed to ensure that: proper accounting
records are maintained; the financial information on which business decisions
are made and which is issued for publication is reliable; and the assets of the
Company are safeguarded. A formal review of the effectiveness of the Company's
risk management and internal control systems is conducted at least once a year
and this was completed successfully during the year under review. The
Investment Manager has established a risk committee to monitor and manage risks
faced by the Company, these committee meetings are attended by Nigel Ward as
disclosed above.
The Board meets formally on a quarterly basis to review the performance of the
Company, its investments and the risks it faces. Prior to each of its quarterly
meetings, the Board receives reports from the Investment Adviser and
Administrator covering: activities during the period; performance of relevant
markets; performance of the Company's assets; finance; compliance matters;
working capital position; and other areas of relevance to the Board. The Board
also considers from time to time reports provided by the Investment Manager and
other service providers. The Board also receives quarterly reports from the
risk committee. There is regular contact between the Board, the Investment
Manager and the Administrator. The Directors maintain overall control and
supervision of the Company's affairs.
The Board is responsible for the appointment and monitoring of all service
providers, including the Investment Manager, and conducts a formal review of
them on an annual basis and confirms that such a review has taken place during
the year.
There may be a requirement to hold Board meetings outside the scheduled
quarterly meetings in order to review and consider investment opportunities and
/or formal execution of documents and to consider ad hoc business.
New Directors receive an induction from the Investment Manager, and all
Directors receive other relevant training as necessary.
Audit committee
Due to the size of the Board, all Directors are members of the Audit Committee.
Sarah Evans acts as Chairman of the Committee. The responsibilities of the
Committee include reviewing: the Annual Report and Financial Statements; the
Interim Report and Financial Statements; the system of internal controls and
risk management; and the terms of the appointment of the auditor, together with
their remuneration. It is also the forum through which the auditor reports to
the Board.
The Committee met three times in the year ended 30 June 2016. Matters
considered at these meetings included but were not limited to:
* review of the accounting policies and format of the financial statements;
* review of the Annual Report and Audited Financial Statements for the year
ended 30 June 2015;
* review of the Interim Report and Unaudited Interim Condensed Financial
Statements for the six months ended 31 December 2015;
* review of the audit plan and timetable for the preparation of the Annual
Report and Audited Financial Statements for the year ended 30 June 2016;
* discussions and approval of the fee for the external audit;
* assessment of the effectiveness of the external audit process as
described below;
* review of the Company's significant risks and internal controls;
* review and consideration of the AIC Code, the GFSC Code and the
Stewardship Code; and
* detailed review of the 2016 Annual Report in relation to updates in the
AIC Code including the period of assessment and long term viability of the
Company.
The Committee considered the following significant issues in relation to these
financial statements:
Valuation, ownership and existence of assets
The Company's accounting policy is to designate all investments at fair value
through profit or loss, and to recognise sales and purchases of those
investments using trade date accounting. The Committee has satisfied itself
that the sources used for pricing the Company's investments are appropriate and
reliable. The Committee has also satisfied itself through regular review of
reports and discussions at Board level, that the custodian has the necessary
expertise to record and report correctly the holdings of the Company at the
date of these financial statements and that any adjustments for trades not yet
settled have been included.
Revenue recognition
Investment income and interest income are accounted for on an accruals basis
using the effective interest method, and dividends receivable are recognised
when the relevant security is quoted ex-dividend as disclosed in Note 1 to the
financial statements. On the sale of an investment, any difference between
sales proceeds and the cost of the asset is recorded as a realised gain or loss
in the profit of loss section of the Statement of Profit or Loss and Other
Comprehensive Income. The Committee has satisfied itself, through discussions
with the relevant parties, that the revenue recognition policy of the Company
is appropriate to its business type and that it has been applied consistently
to these financial statements.
Calculation of the management and performance fees payable
Management and performance fees are calculated by the Company's Administrator
with reference to the Management Agreement (as amended) between the Company and
its Investment Manager. The conditions that must exist before payment of such
fees and the calculation methodology for both fees, is as disclosed in Note 17
to the financial statements. The Committee has satisfied itself, through
discussions with the Administrator, with other relevant parties and through
review of the actual calculation and discussion in the formal forum of the
Committee that the calculation of such fees has been carried out in line with
the agreement.
The Committee also reviews the objectivity and independence of the auditor. The
Board considers KPMG Channel Islands Limited to be independent of the Company.
The audit fees disclosed in the profit of loss section of the Statement of
Profit or Loss and Other Comprehensive Income are in relation to the audit of
the Annual Report and Audited Financial Statements. During the year, KPMG
Channel Islands Limited did not receive any remuneration for non-audit
services.
The Committee assessed the effectiveness of the audit process by considering
KPMG Channel Islands Limited's ("KPMG") fulfilment of the agreed audit plan
through the reporting presented to the Committee by KPMG and the discussions at
the Committee meeting, which highlighted the major issues that arose during the
course of the audit. In addition the Committee also sought feedback from the
Investment Manager and the Administrator on the effectiveness of the audit
process. For this financial year, the Committee was satisfied that there had
been appropriate focus and challenge on the primary areas of audit risk and
assessed the quality of the audit process to be good.
The Committee has considered the re-appointment of the Auditor and has decided
not to put the provision of the external audit out to tender at this time. As
described above, the Committee reviewed the effectiveness and independence of
the Auditor and remains satisfied that they provide effective independent
challenge to the Board, the Investment Manager and the Administrator. The
Committee will continue to monitor the performance of the Auditor on an annual
basis and will consider their independence and objectivity, taking account of
appropriate guidelines.
KPMG has been the Company's Auditor from its incorporation on 22 June 2007
which was the last time a tender exercise was completed for the external audit.
Whilst the Committee will consider the possibility of putting the audit out to
tender in the future, it notes that there is rotation of the audit partner in
accordance with recommended practice. The Committee has therefore recommended
to the Board that KPMG be proposed for re-appointment as the Company's Auditor
at the Annual General Meeting of the Company.
The Board considers that an internal audit function specific to the Company is
unnecessary and that the systems and procedures employed by the Investment
Manager and the Administrator, including their own internal control functions,
provide sufficient assurance that a sound system of internal control is
maintained, which safeguards the Company's assets. Formal terms of reference
for the Committee are available on the Company website www.crystalamber.com.
Other committees
Although the AIC Code recommends that companies appoint Remuneration and
Nomination Committees, the Board has not deemed this necessary, as being wholly
comprised of non-executive Directors, the full Board considers these matters.
The Board has also chosen not to establish a Management Engagement Committee.
However, the Board reviews the arrangements for the provision of management and
other services to the Company on an ongoing basis. The Company receives regular
reporting from the Investment Adviser and regular valuations of the Company's
investments, which allows the Board to form a judgement as to the performance
of its portfolio.
Board meetings, Committee meetings and Directors' attendance
The number of scheduled meetings of the full Board and the Committee attended
by each Director for the year ended 30 June 2016 is set out below.
Board Audit Committee
Scheduled Attended Scheduled Attended
William Collins 4 4 2 2
Sarah Evans 4 4 2 2
Nigel Ward 4 4 2 2
Christopher Waldron 4 4 2 2
In addition to the above, there was 1 additional Board meeting, 1 additional
Audit Committee meeting and 3 additional Board committee meetings during the
year.
Relations with Shareholders
The Board welcomes the views of Shareholders and places great importance on
communication with them. Senior members of the Investment Adviser make
themselves available at all reasonable times to meet with principal
Shareholders and key sector analysts. The Chairman and other Directors are also
available to meet with Shareholders, if required.
All Shareholders have the opportunity to put questions to the Company at its
registered office. The Annual General Meeting of the Company provides a forum
for Shareholders to meet and discuss issues with the Directors and Investment
Adviser. Company information is also available to the shareholders through the
Company's website www.crystalamber.com.
The Board regularly monitors the Shareholder profile of the Company and
receives comprehensive Shareholder reports from the Company's broker at all
quarterly board meetings. A post-results programme of visits to major
Shareholders is conducted by the Company's Broker and Investment Adviser.
EU Alternative Investment Fund Managers Directive (no. 2011/61/EU) ("AIFM
Directive")
The Company is categorised as an externally managed non-EU AIF under the AIFM
Directive. The Investment Manager of the Company is its non-EU AIFM. The
Investment Manager as the AIFM has created a risk committee which meets at
least quarterly to consider the risks faced by the Company and the investment
process, consistent with the requirements of the AIFM Directive. The AIFM has
adopted a Remuneration Policy which accords with the principles established by
AIFM Directive. The Remuneration Policy is in compliance with the requirements
of AIFM Directive and the guidance issued by the FCA. There are no employees of
the AIFM. The Directors of the AIFM received total aggregate remuneration of GBP
20,000 by way of a fixed fee for the year ended 30 June 2016. No variable fee
elements of remuneration were paid to the Directors of the AIFM.
The AIFM Directive outlines the required information which has to be made
available to investors in an Alternative Investment Fund ("AIF") and directs
that material changes to this information be disclosed in the Annual Report of
the AIF. All information required to be disclosed under the AIFM Directive is
either disclosed in this Annual Report or through the Company's website
www.crystalamber.com.
Foreign Account Tax Compliance Act ("FATCA")
The Company is registered under FATCA and continues to comply with FATCA's
requirements to the extent relevant to the Company.
Non-mainstream pooled investments ("NMPI")
The Board has concluded that the Company's Ordinary Shares are not
non-mainstream pooled investments for the purposes of the FCA rules regarding
the restrictions on the promotion to retail investors of unregulated collective
investment schemes and close substitutes, meaning that the restrictions on
promotion imposed by the FCA rules do not apply. The Board has been advised
that the Company would satisfy the criteria for being an investment trust if it
was resident in the UK. It is the Board's intention that the Company conducts
its affairs so that these restrictions will continue to remain inapplicable.
Independent auditor
KPMG Channel Islands Limited have agreed to offer themselves for re-appointment
as auditor of the Company and a resolution proposing their reappointment and
authorising the Directors to determine their remuneration will be presented at
the Annual General Meeting.
Annual General Meeting
The Annual General Meeting of the Company will be held on 18 November 2016 at
Lefebvre Place, Lefebvre Street, St. Peter Port, Guernsey.
On behalf of the Board
William Collins
Nigel Ward
Chairman
Director
12 September 2016 12
September 2016
Directors
William Collins (aged 67), Guernsey Resident, Non-Executive Chairman (appointed
20 November 2007)
William Collins has over 40 years' experience in banking and investment. From
September 2007 he was employed by Bank J. Safra Sarasin (formerly Bank Sarasin)
in Guernsey as Director - Private Clients, retiring at the end of December
2014. Prior to that he worked for Barings in Guernsey for over 18 years. In
1995 he was appointed a Director and from 2003 to August 2007 was Managing
Director of Baring Asset Management (C.I.) Limited. Mr Collins is an Associate
of the Institute of Financial Services, a Chartered Member of the Chartered
Institute for Securities and Investment, and a member of the Institute of
Directors.
Sarah Evans (aged 61), Guernsey Resident, Senior Independent Director
(appointed 22 June 2007*)
Sarah Evans is a chartered accountant and is a non-executive Director of
several listed investment funds and the Association of Investment Companies.
She is a member of the Institute of Directors and has been resident in Guernsey
for over eleven years. Whilst in the UK she spent six years with the Barclays
Group, firstly as a treasury director responsible for the securitisation of the
bank's UK assets. From 1996 to 1998 she was finance director of Barclays
Mercantile (a Barclays Bank subsidiary providing large and middle ticket
leasing finance). In her last two years with Barclays she returned to treasury
as a treasury director. Prior to joining Barclays she ran her own consultancy
business advising UK financial institutions on all aspects of securitisation.
From 1982 to 1988, she worked at Kleinwort Benson Limited latterly as head of
group finance.
Nigel Ward (aged 59), Guernsey Resident, Non-Executive Director (appointed 22
June 2007*)
Nigel Ward is currently a full time independent non-executive Director on the
board of several offshore funds and companies, including London and CISE
listings. Investment mandates include property, agricultural land, student
accommodation, UK equities, European SME credit, and distressed debt. He has
over 40 years' experience of international investment markets, credit and risk
analysis, corporate and retail banking, corporate governance, compliance and
the managed funds industry. He spent 20 years at Baring Asset Management, and
also at TSB Bank, National Westminster Bank and Bank Sarasin. He is a founding
Commissioner of the Guernsey Police Complaints Commission, an Associate of the
Institute of Financial Services, a member of the Institute of Directors and
holds the IoD Diploma in Company Direction.
Christopher Waldron (aged 52), Guernsey Resident, Non-Executive Director
(appointed 1 July 2014)
Christopher Waldron has almost 30 years' experience as an investment manager,
specialising in fixed income, hedging strategies and alternative investment
mandates and until 2013 was Chief Executive of the Edmond de Rothschild Group
in the Channel Islands. Prior to joining the Edmond de Rothschild Group in
1999, Mr Waldron held investment management positions with Bank of Bermuda, the
Jardine Matheson Group and Fortis but he is now primarily an independent
non-executive director of a number of listed funds and investment companies. He
is also a member of the States of Guernsey's Policy and Resources Investment
and Bond Sub-Committee. He is a Fellow of the Chartered Institute of Securities
and Investment.
*Please refer to the Report of the Directors above for clarification regarding
tenure.
In addition to their directorships of the Company, the Directors currently hold
the following directorships of listed companies;
William Collins Sarah Evans
Aberdeen Emerging Markets Investment Apax Global Alpha Limited
Company Limited (formerly Advance HICL Infrastructure Company
Limited
Developing Markets Fund Limited) NB Distressed Debt Investment
Fund Limited
Real Estate Credit Investments
PCC Limited
Ruffer Investment Company Limited
Nigel Ward Christopher Waldron
Acorn Income Fund Limited DW Catalyst Fund Limited
Fair Oaks Income Fund Limited JZ Capital Partners Limited
Hadrian's Wall Secured Investments Ranger Direct Lending Fund plc
Limited
UK Mortgages Limited
Independent Auditor's Report
to the Members of Crystal Amber Fund Limited
We have audited the financial statements of Crystal Amber Fund Limited (the
"Company") for the year ended 30 June 2016 which comprise 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
the related notes. The financial reporting framework that has been applied in
their preparation is applicable law and International Financial Reporting
Standards as issued by the IASB.
This report is made solely to the Company's members, as a body, in accordance
with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has
been undertaken so that we might state to the Company's members those matters
we are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors' Responsibilities set out
above, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements
in accordance with applicable law and International Standards on Auditing (UK
and Ireland). Those standards require us to comply with the Auditing Practices
Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are
appropriate to the Company's circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant accounting
estimates made by the Directors; and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial
information in the Annual Report to identify material inconsistencies with the
audited financial statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the knowledge
acquired by us in the course of performing the audit. If we become aware of any
apparent material misstatements or inconsistencies we consider the implications
for our report.
Opinion on financial statements
In our opinion the financial statements:
· give a true and fair view of the state of the Company's affairs as at 30
June 2016 and of its return for the year then ended;
· are in accordance with International Financial Reporting Standards as
issued by the IASB; and
· comply with the Companies (Guernsey) Law, 2008.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:
· the Company has not kept proper accounting records; or
· the financial statements are not in agreement with the accounting records;
or
· we have not received all the information and explanations, which to the
best of our knowledge and belief are necessary for the purpose of our audit.
KPMG Channel Islands Limited
Chartered Accountants, Guernsey Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2016
2016 2015
Revenue Capital Total Revenue Capital Total
Notes GBP GBP GBP GBP GBP GBP
Income
Dividend income from 1,945,040 - 1,945,040 2,604,854 - 2,604,854
listed investments
Other income 25,000 - 25,000 2,227 - 2,227
Interest received 18,306 - 18,306 11,808 - 11,808
1,988,346 - 1,988,346 2,618,889 - 2,618,889
Net gains on
financial assets at
fair value through
profit or loss
Equities
Net realised (losses) 9 - (18,643,875) (18,643,875) - 26,461,224 26,461,224
/gains
Movement in 9 - 14,319,109 14,319,109 - (16,899,919) (16,899,919)
unrealised gains/
(losses)
Money Market
Investments
Realised gains 9 - - - - 10,870 10,870
Movement in 9 - - - - (4,190) (4,190)
unrealised gains
Derivative Financial
Instruments
Realised losses 9 - (2,984,294) (2,984,294) - (2,079,918) (2,079,918)
Movement in 9 - (254,277) (254,277) - 2,527,050 2,527,050
unrealised (losses)/
gains
Total income 1,988,346 (7,563,337) (5,574,991) 2,618,889 10,015,117 12,634,006
Expenses
Transaction costs 4 - 544,681 544,681 - 892,182 892,182
Exchange movements on - (653,049) (653,049) - 111,648 111,648
revaluation of
investments
Management fees 15,17 2,617,425 - 2,617,425 2,210,782 - 2,210,782
Performance fees 15,17 - - - - 653,962 653,962
Directors' 16 119,750 - 119,750 114,908 - 114,908
remuneration
Administration fees 188,411 - 188,411 157,022 - 157,022
Custodian fees 77,868 - 77,868 65,383 - 65,383
Audit fees 19,826 - 19,826 18,903 - 18,903
Other expenses 277,888 - 277,888 197,327 - 197,327
3,301,168 (108,368) 3,192,800 2,764,325 1,657,792 4,422,117
Return for the year (1,312,822) (7,454,969) (8,767,791) (145,436) 8,357,325 8,211,889
Basic and diluted 5 (1.37) (7.81) (9.18) (0.17) 9.99 9.82
(loss)/earnings per
share (pence)
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
International Financial Reporting Standards. The supplementary information on
the allocation between income return and capital return is presented under
guidance published by the Association of Investment Companies.
The Notes below form an integral part of these financial statements.
Statement of Financial Position
As at 30 June 2016
2016 2015
ASSETS Notes GBP GBP
Cash and cash equivalents 7 1,317,389 19,500,047
Trade and other receivables 8 463,510 295,487
Financial assets designated at fair value 9 151,090,246 142,663,130
through profit or loss
Total assets 152,871,145 162,458,664
LIABILITIES
Trade and other payables 10 1,347,074 6,253,178
Total liabilities 1,347,074 6,253,178
EQUITY
Capital and reserves attributable to the
Company's equity shareholders
Share capital 11 989,998 989,998
Treasury shares 12 (720,478) (9,009,985)
Distributable reserve 109,977,886 114,181,017
Retained earnings 41,276,665 50,044,456
Total equity 151,524,071 156,205,486
Total liabilities and equity 152,871,145 162,458,664
Net asset value per share (pence) 6
153.79 168.26
The financial statements were approved by a Committee of the Board of Directors
and authorised for issue on 12 September 2016.
Statement of Changes in Equity
For the year ended 30 June 2016
Share Treasury Distributable Retained earnings Total
Notes Capital Shares Reserve Capital Revenue Total Equity
GBP GBP GBP GBP GBP GBP GBP
Opening balance 989,998 (9,009,985) 114,181,017 49,606,601 437,855 50,044,456 156,205,486
at 1 July 2015
Purchase of 12 - (1,113,539) - - - - (1,113,539)
Ordinary shares
into Treasury
Sale of 12 - 9,989,766 - - - - 9,989,766
Ordinary shares
from Treasury
12 - (586,720) 586,720 - - - -
Premium on sale
of Ordinary
shares from
Treasury
Dividends paid 13 - - (4,789,851) - - - (4,789,851)
in the year
Return for the - - - (7,454,969) (1,312,822) (8,767,791) (8,767,791)
year
Balance at 30 June 989,998 (720,478) 109,977,886 42,151,632 (874,967) 41,276,665 151,524,071
2016
For the year ended 30 June 2015
Share Treasury Distributable Retained earnings Total
Notes Capital Shares Reserve Capital Revenue Total Equity
GBP GBP GBP GBP GBP GBP GBP
Opening balance 782,297 (2,483,196) 82,926,112 41,249,276 583,291 41,832,567 123,057,780
at 1 July 2014
Issue of 11 207,701 - 32,089,800 - - - 32,297,501
Company shares
Share issue 11 - - (452,286) - - - (452,286)
costs
Purchase of 12 - (6,526,789) - - - - (6,526,789)
Ordinary shares
into Treasury
Dividends paid - - (382,609) - - - (382,609)
in the year
Return for the - - - 8,357,325 (145,436) 8,211,889 8,211,889
year
Balance at 30 June 989,998 (9,009,985) 114,181,017 49,606,601 437,855 50,044,456 156,205,486
2015
Statement of Cash Flows
For the year ended 30 June 2016
2016 2015
Notes GBP GBP
Cash flows from operating activities
Dividend income received from listed investments 1,585,052 2,605,469
Fixed deposit interest received - 32
Bank interest received 20,140 11,911
Other income received 25,000 2,227
Management fees paid (2,617,425) (2,210,782)
Performance fees paid (653,962) (1,747,285)
Directors' fees paid (119,125) (105,771)
Other expenses paid (557,586) (434,968)
Net cash outflow from operating activities (2,317,906) (1,879,167)
Cash flows from financing activities
Proceeds from issue of new Ordinary shares - 32,297,501
Placing fees and issue costs - (452,286)
Purchase of Ordinary shares into Treasury (1,113,539) (6,526,789)
Sale of Ordinary shares from Treasury 9,989,766 -
Dividends paid (4,789,851) (382,609)
Net cash inflow from financing activities 4,086,376 24,935,817
Cash flows from investing activities
Purchase of equity investments (85,356,749) (124,932,337)
Sale of equity investments 68,746,091 118,200,810
Purchase of money market investments - (20,000,000)
Sale of money market investments - 21,554,308
Purchase of derivative financial instruments (11,773,346) (8,342,932)
Sale of derivative financial instruments 8,977,557 5,633,559
Transaction charges on purchase and sale of (544,681) (892,182)
investments
Net cash outflow from investing activities (19,951,128) (8,778,774)
Net (decrease)/increase in cash and cash (18,182,658) 14,277,876
equivalents during the year
Cash and cash equivalents at beginning of year 19,500,047 5,222,171
Cash and cash equivalents at end of year 7 1,317,389 19,500,047
Notes to the Financial Statements
For the year ended 30 June 2016
General Information
Crystal Amber Fund Limited (the "Company") is a company incorporated and
registered in Guernsey on 22 June 2007 and is governed under the provisions of
the Companies (Guernsey) Law, 2008. The address of the registered office is
given above. The Company has been established to provide shareholders with an
attractive total return which is expected to comprise primarily of capital
growth and distributions from accumulated retained earnings taking into
consideration the unrealised gains and losses at that time. The Company will
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 may have a market capitalisation of between GBP
100 million and GBP1,000 million.
The Company was listed and admitted to trading on the Alternative Investment
Market of the London Stock Exchange ("AIM") on 17 June 2008.
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 year, unless otherwise stated.
Basis of preparation
The financial statements give a true and fair view, are in accordance with
International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB") and the Association of
Investment Company's ("AIC") Statement of Recommended Practice "Financial
Statements of Investment Trust Companies and Venture Capital Trusts" issued in
November 2014 to the extent to which it is consistent with IFRS, and comply
with the Companies (Guernsey) Law, 2008. The financial statements are presented
in Sterling, the Company's functional and presentational currency.
These financial statements have been prepared under the historic cost
convention with the exception of financial assets designated at fair value
through profit or loss which are measured at fair value.
The Company has adopted the Investment Entity amendments to IFRS 10, IFRS 12
and IAS 27 which define investment entities together with disclosure
requirements.
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
The Company meets the definition of an investment entity on the basis of the
following criteria.
· The Company obtains funds from multiple investors for the purpose of
providing those investors with investment management services;
· The Company commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation, investment income,
or both; and
· The Company measures and evaluates the performance of substantially all of
its investments on a fair value basis.
To determine that the Company meets the definition of an investment entity,
further consideration is given to the characteristics of an investment entity
that are demonstrated by the Company.
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 material threat to the going concern status of the Company.
Use of estimates and judgements
The preparation of the financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of the reported amounts in these financial statements. The
determination of the Company as an investment entity is a critical judgement,
as discussed above. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates. During the year the Black Scholes option valuation technique has
been utilised to value warrant instruments which uses certain assumptions
related to the risk-free interest rates, expected volatility, expected life and
future dividends as disclosed below.
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 Net Asset Value
("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
mainly in UK equity instruments, and therefore the Company has only a single
operating segment.
Foreign currency translation
Monetary assets and liabilities are translated from currencies other than
Sterling ("foreign currencies") to Sterling (the "functional currency") at the
rate prevailing on the reporting date. Income and expenses are translated from
foreign currencies to Sterling at the rate prevailing at the date of the
transaction. Exchange differences are recognised in the profit of loss section
of the Statement of Profit or Loss and Other Comprehensive Income.
Financial instruments
Financial instruments comprise investments in equity, debt instruments, money
market funds, derivatives, trade and other receivables, cash and cash
equivalents, and trade and other payables. Financial instruments are recognised
initially at fair value. Subsequent to initial recognition financial
instruments are measured as described below.
Financial assets designated at fair value through profit or loss
All the Company's investments including derivative financial instruments are
designated at fair value through profit or loss. They are initially recognised
at fair value, being the cost incurred in their acquisition. Transaction costs
are expensed in the profit of loss section of the Statement of Profit or Loss
and Other Comprehensive Income. Gains and losses arising from changes in fair
value are presented in the profit of loss section of the Statement of Profit or
Loss and Other Comprehensive Income in the period in which they arise.
Purchases and sales of investments are recognised using trade date accounting.
Quoted investments are valued at the bid price on the reporting date or at the
realisable value if the Company has entered into an irrevocable commitment to
sell the investment prior to the reporting date. Where investments are listed
on more than one securities market, the price on the most advantageous market
is used, which is deemed to be the market on which the security was originally
purchased. If the price is not available as at the accounting date, the last
available price is used. The valuation methodology adopted is in accordance
with IFRS 13.
The Company's investments may also include money market funds which are used to
increase the yield on its cash reserves.
Derivative financial instruments
When considered appropriate the Company will enter into derivative contracts to
manage its price risk and provide protection against the volatility of the
market.
Quoted derivatives are valued at the bid price on the reporting date. Where
derivatives are listed on more than one securities market, the price on the
most advantageous market is used, which is deemed to be the market on which the
security was originally purchased. If the price is not available as at the
accounting date, the last available price is used. Gains and losses arising
from changes in fair value are presented in the profit of loss section of the
Statement of Profit or Loss and Other Comprehensive Income in the period in
which they arise.
Warrant instruments which are unlisted are valued at the reporting date using a
Black Scholes option valuation technique, which uses certain assumptions
related to the risk-free interest rates, expected volatility, expected life and
future dividends. Gains and losses arising from changes in fair value are
presented in the profit of loss section of the Statement of Profit or Loss and
Other Comprehensive Income in the period in which they arise.
De-recognition of financial instruments
The Company de-recognises a financial asset when the contractual rights to the
cash flows from the asset expire, or it transfers the rights to receive the
contractual cash flows in a transaction in which substantially all the risks
and rewards of ownership of the financial asset are transferred.
On de-recognition of a financial asset, the difference between the carrying
amount of the asset (or the carrying amount allocated to the portion of the
asset de-recognised), and consideration received (including any new asset
obtained less any new liability assumed) is recognised in the profit of loss
section of the Statement of Profit or Loss and Other Comprehensive Income.
The Company de-recognises a financial liability when its contractual
obligations are discharged, cancelled or expire. Any gain or loss on
de-recognition is recognised in the profit of loss section of the Statement of
Profit or Loss and Other Comprehensive Income.
Cash and cash equivalents
The Company considers all highly liquid investments with original maturities of
less than 90 days when acquired to be cash equivalents.
Share issue expenses
Share issue expenses of the Company directly attributable to the issue and
listing of the shares are charged to the distributable reserve.
Share capital
Ordinary shares are classified as equity where there is no obligation to
transfer cash or other assets.
Income
Investment income and interest income have been accounted for on an accruals
basis using the effective interest method. Dividends receivable are recognised
in the profit of loss section of the Statement of Profit or Loss and Other
Comprehensive Income when the relevant security is quoted ex-dividend. The
Company currently incurs withholding tax imposed by non-UK countries on
dividend income; these dividends are recorded gross of withholding tax in the
profit of loss section of the Statement of Profit or Loss and Other
Comprehensive Income. Withholding tax is recorded in 'Other expenses' in the
Statement of Profit or Loss and Other Comprehensive Income.
Expenses
All expenses are accounted for on an accruals basis. In respect of the analysis
between revenue and capital items presented within the Statement of Profit or
Loss and Other Comprehensive Income, all expenses have been presented as
revenue items except as follows:
· expenses which are incidental to the acquisition and disposal of an
investment are charged to capital; and
· expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of the investments
held can be demonstrated. Accordingly the performance fee is charged to
capital, reflecting the Directors' expected long-term view of the nature of the
investment returns of the Company.
Treasury shares
The Company has adopted the principles outlined in IAS 32 'Financial
Instruments: Presentation' and has treated the consideration paid including
directly attributable incremental cost for the repurchase of Company shares
held in Treasury ("Treasury shares") as a deduction from equity attributable to
the Company's equity holders until the shares are cancelled, reissued or
disposed of. No gain or loss is recognised within the statement of Profit and
Loss and Other Comprehensive Income on the purchase, sale, issue or
cancellation of the Company's own equity investments.
Any consideration received, net of any directly attributable incremental
transaction costs upon sale or re-issue of such shares, is included in equity
attributable to the Company's equity holders.
1. NEW STANDARDS AND INTERPRETATIONS
There were no new or amendments to existing standards and interpretations,
effective from 1 January 2015 or 1 July 2015.
At the date of authorisation of these financial statements, the following
standards and interpretations, which have not been applied in these financial
statements, were issued but not yet effective:
New standards Effective for periods
beginning on or after
IFRS 9 Financial Instruments 1 January 2018
IFRS 10 Applying the consolidation exemption 1 January 2016
IFRS 12 Applying the consolidation exemption 1 January 2016
IAS 27 Equity Method in separate financial 1 January 2016
statements
IAS 28 Applying the consolidation exemption 1 January 2016
Various Amendments as a result of September 1 January 2016
2014 Annual improvements
Various Amendments as a result of the 1 January 2016
Disclosure initiative - December 2014
Various Amendments as a result of the 1 January 2017
Disclosure initiative - January 2016
The Directors anticipate that the adoption of these standards and
interpretations in future periods will not have a material impact on the
Financial Statements of the Company.
2. TAXATION
The Company is exempt from taxation in Guernsey under the provisions of the
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 2008 and is charged an annual
fee of GBP1,200 (2015: GBP1,200).
3. TRANSACTION COSTS
The transaction charges incurred in relation to the acquisition and disposal of
investments during the year were as follows:
2016 2015
GBP GBP
Stamp duty 201,631 410,244
Commissions and custodian transaction charges:
In respect of purchases 133,937 303,278
In respect of sales 209,113 178,660
544,681 892,182
4. BASIC AND DILUTED (LOSS)/EARNINGS PER SHARE
(Loss)/earnings per share is based on the following data:
2016 2015
Return for the year (GBP8,767,791) GBP8,211,889
Weighted average number of issued Ordinary shares 95,504,794 83,644,704
Basic and diluted (loss)/earnings per share (pence) (9.18) 9.82
5. NET ASSET VALUE PER SHARE
Net asset value per share is based on the following data:
2016 2015
Net asset value per Statement of Financial Position GBP151,524,071 GBP156,205,486
Total number of issued Ordinary shares (excluding 98,524,762 92,836,276
Treasury shares) at 30 June
Net asset value per share (pence) 153.79 168.26
6. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash held by the Company available on demand
and on deposit with maturities of less than 90 days. Cash and cash equivalents
were as follows:
2016 2015
GBP GBP
Cash available on demand 1,317,389 19,458,149
Cash on deposit with maturities of less than 90 days - 41,898
1,317,389 19,500,047
8. TRADE AND OTHER RECEIVABLES
2016 2015
GBP GBP
Trade receivables 438,221 270,804
Prepayments 25,289 24,683
463,510 295,487
There are no past due or impaired receivable balances outstanding at the year
end (2015: GBPnil).
9. FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS ("FVTPL")
2016 2015
GBP GBP
Equity investments 148,086,522 139,350,130
Derivative financial instruments 3,003,724 3,313,000
151,090,246 142,663,130
Equity investments
Cost brought forward 160,110,908 125,439,328
Purchases 81,096,969 126,294,308
Sales (68,688,860) (118,083,952)
Realised (loss)/gain (18,643,875) 26,461,224
Cost carried forward 153,875,142 160,110,908
Unrealised losses brought forward (20,171,543) (3,271,624)
Movement in unrealised losses 14,319,109 (16,899,919)
Unrealised losses carried forward (5,852,434) (20,171,543)
Effect of exchange rate movements 63,814 (589,235)
Fair value of equity instruments 148,086,522 139,350,130
Money market investments
Cost brought forward - 1,543,438
Purchases - 20,000,000
Sales - (21,554,308)
Realised gain - 10,870
Cost carried forward - -
Unrealised gains brought forward - 4,190
Movement in unrealised gain - (4,190)
Unrealised gains carried forward - -
Fair value of money market investments - -
Derivative financial instruments
Cost brought forward 1,078,000 582,051
Purchases 11,773,346 8,342,932
Sales (8,844,051) (5,767,065)
Realised losses (2,984,294) (2,079,918)
Cost carried forward 1,023,001 1,078,000
Unrealised gains/(losses) brought forward 2,235,000 (292,050)
Movement in unrealised gains (254,277) 2,527,050
Unrealised gain carried forward 1,980,723 2,235,000
Fair value of derivative financial instruments 3,003,724 3,313,000
Total financial assets designated at FVTPL 151,090,246 142,663,130
At the reporting date the Company's derivative financial instruments consisted
of 2 (2015: 3) FTSE 100 Index Put Option positions, purchased as protection
against a significant market sell-off and two warrant instruments in FairFX and
Hurricane (2015: none) for the purchase of ordinary shares.
Total realised gains and losses and unrealised gains and losses in the
Company's equity, money market investments and derivatives are made up of the
following gain and loss elements:
2016 2015
GBP GBP
Realised gains 19,025,712 33,141,889
Realised losses (40,653,881) (8,749,713)
Net realised (losses)/gains in financial assets (21,628,169) 24,392,176
designated at FVTPL
Movement in unrealised gains (8,601,122) (8,324,156)
Movement in unrealised losses 22,665,954 (6,052,903)
Net movement in unrealised gains/(losses) in financial 14,064,832 (14,377,059)
assets designated at FVTPL
10. TRADE AND OTHER PAYABLES
2016 2015
GBP GBP
Accruals 126,092 118,454
Unsettled trade purchases 1,220,982 5,480,762
Performance fee accrual - 653,962
1,347,074 6,253,178
The carrying amount of trade payables approximates to their fair value.
11. SHARE CAPITAL AND RESERVES
Capital risk management
The Company's objectives when managing capital are to safeguard the Company's
ability to continue as a going concern in order to provide returns to
shareholders and to maintain an optimal capital structure to reduce the cost of
capital.
In order to maintain or adjust the capital structure, the Company may adjust
the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets.
As per the Company's memorandum and articles of association the retained
earnings are distributable by way of dividend in addition to distributable
reserve held on the Company's Statement of Financial Position at the year end.
The Company may carry the profits of the Company to distributable reserve for
any purpose to which the profits of the Company may be properly applied and
either employed in the business of the Company or be invested, in accordance
with applicable law. The distributable reserve represents the amount
transferred from the share premium account which was approved by the Royal
Court of Guernsey on 18 July 2008.
During the year ended 30 June 2016, the Company paid dividends of GBP4,789,851
from distributable reserves, as disclosed in Note 13, and transferred the
premium of GBP586,720 received on the sale of Treasury Shares to distributable
reserves, as disclosed in Note 12.
Externally imposed capital requirement
There are no capital requirements imposed on the Company.
The issued share capital of the Company, including Treasury Shares, is
comprised as follows:
2016 2015
Number GBP Number GBP
Opening balance 98,999,762 989,998 78,229,665 782,297
Ordinary shares issued during the - - 20,770,097 207,701
year
Allotted, called up and fully paid 98,999,762 989,998 98,999,762 989,998
Ordinary shares of GBP0.01 each
On 27 January 2015, 20,770,097 new Ordinary shares were issued for a total
gross consideration of GBP32,297,501. The gross proceeds net of issue costs
totalling GBP452,286 amounted to GBP31,845,215.
Rights attaching to shares
The Ordinary Shares carry the right to vote at general meetings and the
entitlement to receive any dividends and surplus assets of the Company on a
winding up.
12. TREASURY SHARES
2016 2015
Number GBP Number GBP
Opening balance 6,163,486 9,009,985 1,707,856 2,483,196
Treasury shares purchased during the 725,000 1,113,539 4,455,630 6,526,789
year
Treasury shares sold during the year (6,413,486) (9,989,766) - -
Premium transferred to distributable - 586,720 - -
reserve
Closing balance 475,000 720,478 6,163,486 9,009,985
During the year ended 30 June 2016, 725,000 (2015: 4,455,630) Treasury shares
were purchased at an average price of 153.59p per share, representing an
average discount to NAV at the time of purchase of 3.4 per cent, (2015: 146.18p
per share). During the year ended 30 June 2016, 6,413,486 Treasury shares were
sold, representing a premium above cost of GBP586,720 (2015: nil).
Since the year end, a further 110,000 shares have been purchased at a price of
143.00p per share, representing an average discount to NAV of 7 per cent, and
transferred to Treasury.
13. DIVIDS
On 7 July 2015, the Company declared an interim dividend of GBP2,314,807,
equating to 2.5p per Ordinary share, which was paid on 14 August 2015 to
shareholders on the register on 17 July 2015.
On 13 January 2016, the Company declared an interim dividend of GBP2,475,044,
equating to 2.5p per ordinary share, which was paid on 19 February 2016 to
shareholders on record on the register on 22 January 2016.
Subsequent to the year-end, on 14 July 2016, the Company declared an interim
dividend of GBP2,460,369, equating to 2.5p per Ordinary share, which was paid on
19 August 2016 to shareholders on record on the register on 22 July 2016.
14. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
Financial risk management objectives
The Manager, Crystal Amber Asset Management (Guernsey) Limited and the
Administrator, Heritage International Fund Managers Limited ("HIFM"), provide
advice to the Company which allows it to monitor and manage financial risks
relating to its operations through internal risk reports which analyse
exposures by degree and magnitude of risks. The Manager and the Administrator
report to the Board on a quarterly basis. The risks relating to the Company's
operations include credit risk, liquidity risk, and the market risks of
interest rate risk, price risk and foreign currency risk.
Credit risk
Credit risk refers to the risk that the counterparty to a financial instrument
will default on its contractual obligations that it has entered into with the
Company resulting in financial loss to the Company. At 30 June 2016 the major
financial assets which were exposed to credit risk included financial assets
designated at fair value through profit or loss and cash and cash equivalents.
The carrying amounts of financial assets best represent the maximum credit risk
exposure at 30 June 2016. The Company's credit risk on liquid funds is
minimised because the counterparties are banks with high credit ratings
assigned by an international credit-rating agency.
The table below shows the cash balances at the Statement of Financial Position
date and the Standard & Poor's credit rating for each counterparty at that
date.
Location Rating Cash Cash
Balance Balance
2016 2015
GBP GBP
ABN AMRO (Guernsey) Limited Guernsey A 867,364 19,369,133
HSBC Bank plc - Guernsey Branch Guernsey AA- - 51,897
Barclays Bank plc - Isle of Man Isle of A- 450,025 79,017
Branch Man
1,317,389 19,500,047
The credit ratings disclosed above are the credit ratings of the parent
entities of each of the counterparties namely ABN AMRO Bank N.V., HSBC Bank plc
and Barclays Bank plc.
The Company's credit risk on financial assets designated at fair value through
profit or loss is considered minimal as these assets are quoted equities. The
Company is also exposed to credit risk on the financial assets with its brokers
for unsettled transactions. This risk is considered minimal due to the short
settlement period involved and the high credit quality of the brokers used.
At 30 June 2016 GBP148,953,886 (2015: GBP158,719,263) of the financial assets of
the Company were held by the Custodian, ABN AMRO (Guernsey) Limited. Bankruptcy
or insolvency of the Custodian may cause the Company's rights with respect to
financial assets held by the Custodian to be delayed or limited. The Company
monitors its risk by monitoring the credit quality and financial position of
the Custodian. The parent of the Custodian has a Standard & Poor's credit
rating of A.
Liquidity risk
Liquidity risk is the risk that the Company will be unable to meet its
obligations arising from financial liabilities. Ultimate responsibility for
liquidity risk management rests with the Board of Directors, which has built an
appropriate framework for the management of the Company's liquidity
requirements.
The Company adopts a prudent approach to liquidity risk management and
maintains sufficient cash reserves to meet its obligations. All the Company's
Level 1 investments are listed and are subject to a settlement period of three
days.
The following tables detail the Company's expected maturity for its financial
assets and liabilities:
2016 Weighted average Less than 1 1-5 5+ Total
interest rate year years years
Assets GBP GBP GBP GBP
Non-interest bearing 151,553,756 - - 151,553,756
Variable interest rate 0.23% 1,317,389 - - 1,317,389
instruments
Liabilities
Non-interest bearing (1,347,074) - - (1,347,074)
151,524,071 - - 151,524,071
2015 Weighted average Less than 1 1-5 5+ Total
interest rate year years years
Assets GBP GBP GBP GBP
Non-interest bearing - 142,958,617 - - 142,958,617
Variable interest rate 0.25% 19,500,047 - - 19,500,047
instruments
Liabilities
Non-interest bearing - (6,253,178) - - (6,253,178)
156,205,486 - - 156,205,486
Market risk
The Company is exposed through its operations to market risk which encompasses
interest rate risk, price risk and foreign exchange risk.
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will
fluctuate due to changes in market interest rates. The Company is exposed to
interest rate risk as it has funds held on deposit and current account
balances. The Company's exposure to interest rates is detailed in the liquidity
risk section of this note. Interest rate repricing dates are consistent with
the maturities dated in the liquidity risk section of this note.
The Investment Manager monitors market interest rates and will place interest
bearing assets at best available rates but also taking into consideration the
counterparty's credit rating and financial position.
Interest rate sensitivity analysis
The sensitivity analysis below has been based on the exposure to interest rates
for financial assets held at the Statement of Financial Position date. An
increase/decrease of 0.15 percentage points represents management's assessment
of a possible change in interest rates. If interest rates had been 0.15
percentage points (2015: 0.15 percentage points) higher/lower and all other
variables were held constant:
· the Company's return for the year ended 30 June 2016 would have increased/
decreased by GBP6,238 (2015: GBP7,085);
· there would have been no impact on equity reserves other than retained
earnings.
Price risk
Price risk is the risk that the fair value of investments will fluctuate as a
result of changes in market prices. This risk is managed through
diversification of the investment portfolio across business sectors. Generally
the Company will seek not to invest more than 20 per cent of the Company's
gross assets in any single investment at the time of investment. However, there
is no guarantee that this will be the case after any investment is made,
particularly where it is believed that an investment is exceptionally
attractive.
During the year to 30 June 2016 the Company entered into various index put
derivative option contracts to protect the Company's value against a
significant fall in the market. At 30 June 2016, GBP714,000 (2015: GBP3,313,000) of
these contracts were outstanding.
The following tables detail the Company's positions in derivative financial
instruments:
Options Nominal Amount Value
2016 GBP
Derivative financial instruments
Puts on UKX P5800 (Expiry: July 2016) 700 49,000
Puts on UKX P6000 (Expiry: August 2016) 1,000 665,000
1,700 714,000
Warrant instruments No. of warrants Value
2016 GBP
Hurricane Energy plc (Expiry: March 2019) 23,333,333 1,555,353
FairFX plc (Expiry: May 2019) 7,500,000 734,370
30,833,333 2,289,723
Nominal Amount Value
2015 GBP
Derivative financial instruments
Puts on UKX P6450 (Expiry: July 2015) 800 608,000
Puts on UKX P6700 (Expiry: July 2015) 1,000 1,975,000
Puts on UKX P6450 (Expiry: August 2015) 500 730,000
2,300 3,313,000
As at 30 June 2016, the following tables detail the Company's investments.
Shareholders requiring further information about the portfolio should apply in
writing to the Company's registered office.
2016
Equity Investments Sector Value Percentage of
GBP Fund's
Gross Assets
Grainger plc Property 30,061,400 20
Hurricane Energy plc Oil and Gas 25,967,783 17
Pinewood Group plc Media 16,881,800 11
Northgate plc Transportation 13,000,000 9
Services
Leaf Clean Energy Company Renewable Energy 11,657,732 8
STV Group plc Media 9,342,455 6
FairFX Group plc Financial Services 7,701,900 5
Sutton Harbour Holdings plc Transportation 7,609,728 5
Services
Restaurant Group plc Food and Beverage 6,218,801 4
Hansard Global plc Insurance 4,688,716 3
NBNK Investments plc Financial Services 4,600,631 3
Coats Group plc Media 3,977,180 3
Other Various 6,378,396 4
Total 148,086,522 98
2015
Equity Investments Sector Value Percentage of
GBP Fund's
Gross Assets
Grainger plc Property 32,418,600 20
Hurricane Energy plc Oil and Gas 12,133,063 7
Leaf Clean Energy Company Financial Services 11,932,014 7
STV Group plc Media 11,449,229 7
Pinewood Group plc Media 10,687,950 7
Sutton Harbour Holdings plc Transportation 9,582,621 6
Services
Coats Group plc Media 8,392,525 5
Dart Group plc Transportation 7,234,354 4
Services
Balfour Beatty plc Infrastructure 4,855,763 3
4imprint Group plc Consumer 4,686,248 3
NBNK Investments plc Financial Services 4,403,777 3
Johnston Press plc Media 4,332,558 3
Tribal Group plc Consulting Services 4,292,326 3
Hansard Global plc Insurance 4,136,046 3
Other Various 8,813,056 5
Total 139,350,130 86
The following table details the investments in which the Company holds a
greater than 20 per cent holding in the underlying entities. These have been
recognised at fair value as the Company is regarded as an Investment Entity as
referred to in Note 1.
Equity Investments Place of Business Place of Percentage Percentage
Incorporation Ownership Ownership
Interest Interest
2016 2015
Leaf Clean Energy Company United Kingdom Cayman Islands 29.9 29.9
FairFX Group plc United Kingdom United Kingdom 24.9 -
Sutton Harbour Holdings plc United Kingdom United Kingdom 29.3 29.3
NBNK Investments plc United Kingdom United Kingdom 28.5 28.2
At the year end and assuming all other variables are held constant:
· If market prices had been 25 per cent higher, the Company's profit and net
assets for the year ended 30 June 2016 would have increased by GBP36,309,140
(2015: GBP31,549,532);
· If market prices had been 25 per cent lower, the Company's profit and net
assets for the year ended 30 June 2016 would have decreased by GBP19,519,031
(2015: GBP451,468), reflecting the effect of the derivative financial instruments
held at the reporting date.
· There would have been no impact on the other equity reserves.
Foreign exchange risk
Foreign exchange risk is the risk that the value of financial instruments will
fluctuate due to changes in foreign exchange rates and arises when the Company
invests in financial instruments and enters into transactions that are
denominated in currencies other than its functional currency. During the year
the Company was exposed to foreign exchange risk arising from equity
investments held in New Zealand Dollars, and Australian Dollars.
The table below illustrates the Company's exposure to foreign exchange risk at
30 June 2016:
2016 2015
GBP GBP
Financial assets designated at fair value through profit
and loss:
Listed equity securities denominated in Australian 804,878 541,140
Dollars
Listed equity securities denominated in New Zealand - 2,346,021
Dollars
Total Assets 804,878 2,887,161
If the Australian Dollar weakened/strengthened by 10 per cent against GBP with
all other variables held constant, the effect on the fair value of equity
investments would increase/decrease by GBP80,488 (2015: GBP54,114).
If the New Zealand Dollar weakened/strengthened by 10 per cent against GBP with
all other variables held constant, the effect on the fair value of equity
investments would increase/decrease by GBPnil (2015: GBP234,602).
Fair value measurements
The Company measures fair values using the following fair value hierarchy that
prioritises the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). The three levels
of the fair value hierarchy under IFRS 7 are as follows:
Level 1: Quoted price (unadjusted) in an active market for an identical
instrument.
Level 2: Valuation techniques based on observable inputs, either directly
(i.e. as prices) or indirectly (i.e. derived from prices). This category
includes instruments valued using: quoted prices in active markets for similar
instruments; quoted prices for identical or similar instruments in markets that
are considered less than active; or other valuation techniques for which all
significant inputs are directly or indirectly observable from market data.
Level 3: Valuation techniques using significant unobservable inputs. This
category includes all instruments for which the valuation technique includes
inputs not based on observable data and the unobservable inputs have a
significant effect on the instrument's valuation. This category includes
instruments that are valued based on quoted prices for similar instruments for
which significant unobservable adjustments or assumptions are required to
reflect differences between the instruments.
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement. For this purpose, the
significance of an input is assessed against the fair value measurement in its
entirety. If a fair value measurement uses observable inputs that require
significant adjustment based on unobservable inputs, that measurement is a
Level 3 measurement. Assessing the significance of a particular input to the
fair value measurement in its entirety requires judgement, considering factors
specific to the asset or liability.
The determination of what constitutes 'observable' requires significant
judgement by the Company. The Company considers observable data to be that
market data that is readily available, regularly distributed or updated,
reliable and verifiable, not proprietary, and provided by independent sources
that are actively involved in the relevant market.
The objective of the valuation techniques used is to arrive at a fair value
measurement that reflects the price that would be received to sell an asset or
transfer a liability in an orderly transaction between market participants at
the measurement date.
The following tables analyse within the fair value hierarchy the Company's
financial assets measured at fair value at 30 June 2016 and 30 June 2015:
Level 1 Level 2 Level 3 Total
2016 GBP GBP GBP GBP
Financial assets designated at fair
value through profit and loss:
Equity investments - equity 143,406,419 - 4,680,103 148,086,522
securities
Derivatives - Listed securities 714,000 - - 714,000
Derivatives - Warrant instruments - 2,289,724 - 2,289,724
144,120,419 2,289,724 4,680,103 151,090,246
Level 1 Level 2 Level 3 Total
2015 GBP GBP GBP GBP
Financial assets designated at fair
value through profit and loss:
Equity investments - equity 139,350,130 - - 139,350,130
securities
Derivatives - Listed securities 3,313,000 - - 3,313,000
142,663,130 - - 142,663,130
The Level 1 equity investments were fair valued with reference to the closing
bid prices in each investee company on the reporting date.
The Level 2 investments were fair valued using a Black Scholes valuation
technique.
The Level 3 investments were fair valued with reference to the last available
price of the shares in each investee company on the reporting date.
For financial instruments not measured at fair value through profit or loss,
the carrying amount is approximate to their fair value.
Transfers between Level 1 and Level 3
The following table shows all transfers from Level 1 to Level 3 of the fair
value hierarchy for financial assets recognised at fair value:
Transfers from
Level 1 to Level 3
2016 2015
GBP GBP
Opening balance at 1 July
- -
San Leon Energy plc - Transfer to Level 3 on 21 January 79,471
-
NBNK Investments plc - Transfer to Level 3 on 20 June 4,600,632
-
Movement in unrealised gain - -
Closing balance at 30 June 4,680,103
-
The Fund recognises transfers between levels of the fair value hierarchy on the
date of the event of change in circumstances that caused the transfer.
Financial assets were transferred from Level 1 to Level 3 on 21 January 2016,
when shares in investee company San Leon Energy plc were suspended from trading
on the London Stock Exchange. As no quoted price is available, the valuation
has been determined using unobservable inputs. The Fund's investment in San
Leon Energy plc is deemed to be fully recoverable and therefore, it is deemed
appropriate to value at price quoted on 21 January 2016.
Financial assets were transferred from Level 1 to Level 3 on 20 June 2016, when
shares in investee company NBNK Investments plc were de-listed from trading on
the London Stock Exchange. As no quoted price is available, the valuation has
been determined using unobservable inputs. The Fund's investment in NBNK
Investments plc is deemed to be fully recoverable and therefore, it is deemed
appropriate to value at price quoted on 20 June 2016. Since the year end, the
Fund has received a distribution from NBNK Investments of GBP5.1 million.
At the year end and assuming all other variables are held constant:
· If unobservable inputs in Level 3 investments had been 5 per cent higher/
lower, the Company's profit and net assets for the year ended 30 June 2016
would have increased/decreased by GBP234,005 (2015: GBPnil); and
· There would have been no impact on the other equity reserves.
15. 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 (2015: 10,000) Ordinary
shares, representing 0.01 per cent (2015: 0.01 per cent) of the voting share
capital of the Company at the year end.
During the year the Company incurred management fees of GBP2,617,425 (2015: GBP
2,210,782) none of which was outstanding at the year end. No performance fee is
payable for the year (2015: GBP653,962).
As at 30 June 2016 the Investment Manager held 4,015,606 Ordinary shares (2015:
3,600,000) of the Company, representing 4.08 per cent (2015: 3.88 per cent) of
the voting share capital.
16. DIRECTORS' INTERESTS AND REMUNERATION
The interests of the Directors in the share capital of the Company at the year
end and as at the date of this report are as follows:
2016 2015
Number of Total Number of Total
Ordinary Voting Ordinary Voting
shares Rights shares Rights
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%
During the year the Directors earned the following remuneration in the form of
Directors' fees from the Company:
2016 2015
GBP GBP
William Collins 35,000 34,966
Sarah Evans 30,000 29,969
Nigel Ward 29,750 24,973
Christopher Waldron 25,000 25,000
Total 119,750 114,908
At 30 June 2016, directors' fees of GBP29,375 (2015: GBP28,750) were accrued within
trade and other payables.
In 2015 each Director received an additional, one-off fee of GBP5,000 for
services provided relating to the placement of shares on 27 January 2015.
During the year, Nigel Ward received a one-off fee of GBP3,500 for services
undertaken in respect of assisting the Investment Manager during 2015 to
establish the risk committee with the appropriate terms of reference. With
effect from 1 January 2016, Nigel Ward received an increase in remuneration of
GBP2,500 to reflect additional services provided to the Fund in respect of
managing risk as detailed above.
17. MATERIAL AGREEMENTS
The Company has entered into the following material agreements:
Crystal Amber Asset Management (Guernsey) Limited (the "Manager")
With effect from 1 April 2013, under the addendum to the management agreement,
the Manager receives a management fee at the annual rate of 2 per cent of the
NAV or the Market Capitalisation, whichever is lower. The management fee is
payable quarterly in advance and calculated on the NAV or the Market
Capitalisation on the relevant quarterly accounting date.
In addition, the Manager is entitled to a performance fee in certain
circumstances. This fee is calculated by reference to the increase in NAV per
Ordinary share over the course of each performance period.
Payment of the performance fee is subject to:
1. the achievement of a performance hurdle condition: the NAV per Ordinary
share at the end of the relevant performance period must exceed an amount equal
to the placing price increased at a rate of 7 per cent per annum on an annual
compounding basis up to the end of the relevant performance period ("the Basic
Performance Hurdle"); and
2. the achievement of a "high watermark": the NAV per Ordinary share at the
end of the relevant performance period must be higher than the highest
previously reported NAV per Ordinary share at the end of a performance period
in relation to which a performance fee, if any, was last earned. If no
performance fee has been earned since admission, the NAV per Ordinary share
must be higher than the placing price.
If the Basic Performance Hurdle is met, and the high watermark exceeded, the
performance fee is an amount equal to 20 per cent of the excess of the NAV per
Ordinary share at the end of the relevant performance period over the higher
of:
1. the Basic Performance Hurdle;
2. the NAV per Ordinary share at the start of the relevant performance
period; and
3. the high water mark.
The above arrangements were in effect until 21 August 2013, when they were
modified as set out below.
On 21 August 2013 the Company issued 18,229,665 new Ordinary shares on AIM and
CISE. Following this issue, the basis of the calculation of the management fee
was changed so that the rate of 2 per cent continues to apply to the Market
Capitalisation of the Company at 30 June 2013 (GBP73.5 million) (the "Base
Amount") and to the extent that an amount equal to the lower of the Company's
NAV and market capitalisation, at the relevant time of calculation, exceeds the
Base Amount (the "Excess Amount"), the applicable fee rate on the Excess Amount
will be 1.5 per cent.
The conditions for the payment of the performance fee also changed following
the issue. The hurdle condition has now increased from 7 per cent to 8 per cent
for the period after issue to the end of the relevant performance period. Prior
to issue, the performance fee was payable in cash, subsequent to the issue it
depends on whether Ordinary shares are trading at a discount or premium to the
Company's NAV per Ordinary share:
· If Ordinary shares are trading at a discount to the NAV per Ordinary
share, the performance fee shall be payable in cash. Within a period of one
calendar month after receipt of such cash payment, the Manager shall be
required to purchase Ordinary shares in the market of a value equal to such
cash payment.
· If Ordinary shares are trading at, or at a premium to, the NAV per
Ordinary share, the performance fee shall be satisfied by the sale of Ordinary
shares out of Treasury or by the issue of new fully paid Ordinary shares. The
number of Ordinary shares that shall become payable shall be a number equal to
the performance fee payable divided by the closing mid-market price per
Ordinary share on the date on which such performance fee became payable.
The above arrangements remained in place until 23 January 2015, at which point
there was an EGM of the Company. At this EGM, and following the issue of a
further 20,770,097 new ordinary shares on AIM on 27 January 2015, it was agreed
that the hurdle condition be increased from 8 per cent to 10 per cent for the
period after issue to end of the relevant performance period and for future
performance periods. The payment options remain as above.
Performance fee for year ended 30 June 2016
At 30 June 2016, the Basic Performance Hurdle was 176.62p and the NAV per share
before any accrual for any performance fee payable in respect of the year then
ended was 153.79p. Accordingly, no performance fee was payable at 30 June
2016.
Heritage International Fund Managers Limited (the "Administrator")
The Administrator has been appointed to provide administration and company
secretarial services to the Company. For these services, the Administrator is
paid an annual fee of 0.12 per cent (2015: 0.12 per cent) of that part of the
NAV of the Company up to GBP150 million and 0.1 per cent (2015: 0.1 per cent) of
that part of the NAV over GBP150 million (subject to a minimum of GBP75,000 per
annum).
ABN AMRO (Guernsey) Limited
Under the custodian agreement, the Custodian receives a fee, calculated and
payable quarterly in arrears at the annual rate of 0.05 per cent (2015: 0.05
per cent) of the NAV per annum, subject to a minimum fee of GBP25,000 per annum.
Transaction charges of GBP100 per trade for the first 200 trades processed in a
calendar year and GBP75 per trade thereafter are also payable.
18. ULTIMATE CONTROLLING PARTY
In the opinion of the Directors, on the basis of the shareholdings advised to
them, the Company has no ultimate controlling party.
19. POST BALANCE SHEET EVENTS
On 14 July 2016, the Company declared an interim dividend of GBP2,460,369,
equating to 2.5p per Ordinary share, which was paid on 19 August to
shareholders on record on the register on 22 July 2016.
The Company purchased 110,000 of its own Ordinary Shares during the period
between 1 July 2016 and 12 September 2016, which were held as Treasury Shares.
Following these purchases, the total number of Ordinary Shares held as Treasury
Shares by the Company is 585,000.
On 4 August 2016, the Company reported that its unaudited NAV at 31 July 2016
was 161.41p per share.
On 8 September 2016, the Company reported that its unaudited NAV at 31 August
2016 was 189.96p per share.
On 12 September 2016, the Company announced the appointment of a new broker,
Winterflood Investment Trusts, in place of Numis Securities Limited.
END
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September 13, 2016 02:00 ET (06:00 GMT)
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