Crystal Amber Fund Limited Monthly Net Asset Value

 
TIDMCRS 
 
13 July 2018 
 
 
                          CRYSTAL AMBER FUND LIMITED 
 
                     ("Crystal Amber Fund" or the "Fund") 
 
                            Monthly Net Asset Value 
 
 
Crystal Amber Fund announces that its unaudited net asset value ("NAV") per 
share at 30 June 2018 was 244.62 pence (31 May 2018: 230.75 pence per share). 
 
The proportion of the Fund's NAV at 30 June 2018 represented by the ten largest 
shareholdings, other investments and cash (including accruals), was as follows: 
 
Ten largest shareholdings      Pence per share Percentage of investee equity 
                                               held 
 
Hurricane Energy plc                62.1                     6.5% 
 
Northgate plc                       35.3                     6.3% 
 
FairFX Group plc                    34.9                     19.2% 
 
STV Group plc                       32.1                     18.2% 
 
De La Rue plc                       18.8                     3.2% 
 
Woodford PCT plc                    15.9                     2.3% 
 
Leaf Clean Energy Co.                8.9                     29.9% 
 
NCC Group                            5.6                     1.0% 
 
GI Dynamics Inc                      4.3                     48.3% 
 
Cenkos plc                           3.9                     6.8% 
 
Total of ten largest                221.8 
shareholdings 
 
Other investments                   34.2 
 
Cash and accruals                   -11.4 
 
Total NAV                           244.6 
 
Investment adviser's commentary on the portfolio 
 
Over the quarter to 30 June 2018, NAV per share grew by 18.5%. Over the year to 
30 June 2018, NAV per share increased by 19.7%. Including the two dividends 
paid, NAV per share total return was 22.1%. 
 
The top three positive contributors to NAV growth over the quarter to 30 June 
2018 were Hurricane Energy plc (13.0%), STV Group plc (4.5%) and Fair FX Group 
plc (4.4%). Top detractors were Johnston Press plc (-0.3%), Leaf Clean Energy 
Co (-0.1%) and Hansard Global plc (-0.1%). 
 
Northgate plc ("Northgate") 
 
Over the quarter, Northgate's share price rose by 20.4% as it re-rated to 
around net asset value.  We were pleased to see that Northgate's share price 
recovered following the Fund's public comments in April and its commencement of 
a more proactive activist role. 
 
The company's trading update and full year results confirmed that the number of 
UK vehicles on hire has returned to year-on-year growth - an important 
milestone if the business is to reverse its market share losses over coming 
quarters.  However, the Fund remains disappointed by the continuing lack of 
visibility on the prospects for underlying earnings growth and importantly the 
lack of any catalyst to increase shareholder value. 
 
The Fund believes that there is substantial value in Northgate's large Spanish 
business that remains unrecognised by the UK equity market despite repeated 
evidence of strong trading and financial performance.  We continue to press 
Northgate's board to consider a sale of this business or a partial listing in 
order to release this value at a moment of high investor interest in Spanish 
assets supported by a strong Spanish economy. 
 
The Fund is concerned by the lack of strategic leadership and the communication 
from Northgate's Chairman, Andrew Page.  In his introductory remarks to last 
month's full year results presentation, Mr Page referred to Northgate's 29% 
fall in earnings as "slightly depressed".  We consider that he has failed to 
take responsibility for the under-delivery of the company, both operationally 
and for shareholders during his tenure. 
 
Despite enjoying the tailwind of a growth market, Northgate's number of UK 
vehicles on hire has fallen 11% organically since autumn 2015, when Mr Page was 
appointed Chairman.  The company's total shareholder return over this period 
has been -3%, whilst UK equities have delivered over 30%.  The Fund notes that 
the company's website continues to highlight its total shareholder returns 
until the end of April 2017 when the share price was 540p, more than 20% higher 
than the current price. 
 
The Fund would have welcomed Northgate's directors purchasing shares following 
the full year results announcement, as a demonstration of their belief in the 
company's prospects and undervaluation. 
 
The Fund remains keen for the company to properly consider all available 
options that might release value. 
 
Ocado Group plc ("Ocado") 
 
In the second quarter of last year, the Fund commenced building a stake in 
Ocado. This was a contrarian view, particularly against a backdrop of around 
20% of the company's share capital being shorted by several hedge funds. At 
that time, we felt that the business was wrongly perceived as simply an online 
food retailer. 
 
In private engagement with the company, we suggested that it focus on 
highlighting the growth prospects and scalability of the Ocado Smart Platform 
("OSP") to technology analysts rather than to food retail analysts. We welcomed 
the decision to separate out the OSP business in segmental reporting. 
 
A year after our investment, the company has closed four deals commercialising 
its OSP, most significantly with The Kroger Co. We consider that market 
participants now recognise the value of this scarce asset, sought after by 
grocers facing the threat posed by Amazon. 
 
As the Ocado share price has rerated very substantially, the Fund exited this 
position realising a profit of GBP8.3m. 
 
Leaf Clean Energy Company ("Leaf") 
 
In April, the company announced a disappointing outcome in its litigation 
against Invenergy. The Court found that Invenergy had breached its contractual 
obligations, but surprisingly that Leaf was only entitled to nominal damages. 
Following legal advice received, Leaf has lodged an appeal to this judgment. 
 
In June, the final Court order set a value of $50.7m for Leaf's investment in 
Invenergy.  A payment for $36.4m was received by Leaf, with $15.3m paid by 
Invenergy into an escrow account pending the result of the appeal. At the end 
of June, the company announced a capital redemption worth GBP19.5m. In July, the 
Fund received GBP5.8m as a cash return and GBP0.8m as loan repayment. 
 
Following the redemption, Leaf's market capitalisation is approximately GBP10m. 
Leaf has GBP3.1m (equivalent to 6p a share) in uncommitted cash resources to fund 
its legal and corporate costs, $15.3m (equivalent to 22p a share) in escrow 
from the Court order and is appealing for an additional payment of $85.8m 
(equivalent to 123p a share) for damages. 
 
Leaf's shares were down 3.1% over the period. 
 
Woodford Patient Capital Trust ("WCPT") 
 
Over the period, the Fund increased its position in  WPCT,  a closed end 
investment fund specialised in early stage companies. It listed in the spring 
of 2015 and the share price promptly traded at a 15% premium to NAV. With 
hindsight, this was perhaps the peak of inflated expectations, given the 
long-term nature of returns of its investments. 
 
At the time of the Fund's investment in WPCT, not only had the premium eroded, 
but the shares were trading on a double-digit discount. The Fund believes that 
the share price represented the trough of disillusionment and was more a 
reflection of some setbacks within the portfolio of Woodford's Equity Income 
Fund. 
 
The Fund has been tracking WPCT for some time. The $150m cash injection in 
March 2018 into Prothena by Celgene, the world's largest haematology biopharma 
company, represented a major endorsement. The Fund commenced purchasing shares 
immediately following this news flow. 
 
In June, WPCT shares faced selling pressure as a result of leaving the FTSE 250 
Index. The Fund took advantage of this index related selling and significantly 
increased its shareholding. Since then, positive portfolio developments 
including the listing of Autolus, have contributed to an increase in net asset 
value to 91.9p at the end of the quarter. The Fund continues to believe that 
the current share price represents an attractive entry level to access a growth 
portfolio of highly scalable businesses. 
 
At the period end, the Fund owned 2.3% of WPCT's issued share capital at an 
average cost of 78.2p per share. WPCT's share price increased by 4.6% over the 
period. 
 
Hurricane Energy plc ("Hurricane") 
 
Over the quarter, Hurricane's Early Production System ("EPS") continued to make 
progress. The newly-fabricated buoy for the Aoka Mizu arrived in Shetland and 
the installation of the turret mooring system is underway. The EPS remains on 
budget and on schedule for first oil in early 2019. 
 
Steven McTiernan was appointed chairman in April. He brings a wealth of 
experience from his 45 years in the oil and gas industry and investment 
banking. He was formerly Senior Independent Director at Tullow Oil and is 
currently chairman of premium listed Kenmare Resources. Having met him before 
his appointment, we are confident that he will maintain high standards of 
corporate governance. His extensive M&A experience should help management along 
the path of monetisation. We are pleased that the Fund's concerns regarding the 
need to improve corporate governance and standards have not only been 
recognised by the company but are now being addressed. 
 
Hurricane's shares were up 47% over the period, and the Fund realised profits 
of GBP7m. This brings total realised gains from Hurricane to GBP23.6m at the end of 
the period, when the Fund remained Hurricane's largest independent shareholder 
and the Fund's largest investment. 
 
Transactions in Own Shares 
 
Over the quarter, the Fund bought back 150,000 of its own ordinary shares at an 
average price of 217.4p per share as part of its buyback programme.  These 
shares are held in treasury, where a total of 1,798,982 ordinary shares are 
currently held. 
 
For further enquiries please contact: 
 
Crystal Amber Fund Limited 
 
Chris Waldron (Chairman) 
 
Tel: [phone] 
 
www.crystalamber.com 
 
Allenby Capital Limited - Nominated Adviser 
 
David Worlidge/Liz Kirchner 
 

Tel: [phone] 
 
Winterflood Investment Trusts - Broker 
 
Joe Winkley/Neil Langford 
 
Tel: [phone] 
 
Crystal Amber Advisers (UK) LLP - Investment Adviser 
 
Richard Bernstein 
 
Tel: [phone] 
 
 
 
END 
 

(END) Dow Jones Newswires

July 13, 2018 03:42 ET (07:42 GMT)