Crystal Amber Fund Limited
(the “Fund” or the “Company”)
Potential placing and proposed new dividend policy
The Board is considering a secondary issue of new ordinary shares in the Company (“Shares”) (the “Placing”) to facilitate further investment
opportunities, in the light of the Company’s recent performance. By way of background, the Company delivered a 68.5 per cent NAV total return in the three year period to 4 December 2014 and a 85.1 per cent. increase in the Share price over the same period.
Accordingly, the Board, the investment manager and investment adviser believe that the Fund is appropriately positioned to continue to deliver attractive returns, through its focus on special situation holdings which are more dependent upon self-help and active engagement than upon macroeconomic recovery. Preliminary discussions have therefore been initiated with certain of the major shareholders regarding the potential to finance further investment opportunities through a secondary issue of Shares. The Board believes that by increasing the size of the Fund, it will be able to acquire larger holdings offering the potential to increase its influence, invest in larger companies with increased liquidity and help drive down further the Fund’s total expense ratio.
In light of positive feedback from these discussions, the Board has instructed the Fund’s advisers to give consideration to the implementation of the Placing.
The Board intends that any such secondary issue would be priced at a price equal to at least the prevailing NAV per share. As at 30 November 2014, the NAV per share was 150.07p, which equated to a market capitalisation of approximately £113 million. The Board also intends to continue the discount management policy, through the implementation of the Fund’s Share buyback programme, for the foreseeable future, subject to the Board’s discretion and the requirements of the AIM Rules.
The Fund’s advisers intend to discuss the potential for a secondary issue of Shares with other holders of Shares (“Shareholders”) and with potential new investors and a further announcement in relation to the Placing and the obtaining of the requisite approval of Shareholders will be made in due course.
Proposed new dividend policy
The Company’s dividend policy is to distribute to Shareholders as a dividend a proportion of the income received from the Company’s portfolio holdings, with the level of dividend receipts therefore expected to vary based on the composition of the portfolio from time to time. In respect of each of the two financial years ended 30 June 2014, the Board declared a dividend of 0.5p per Share.
The dividend policy, however, also states that the Company will in certain circumstances also have the ability to make distribution payments out of realised investments if considered to be in Shareholders’ interests.
At 30 June 2014, the Company had retained earnings of £41.8 million. In view of the accumulated realised gains of the Company, the Board has now resolved to modify the dividend policy such that it now intends to increase the level of dividends paid to Shareholders with effect from 1 January 2015 for the foreseeable future. Accordingly, subject to the conditions set out below, the Board intends to recommend a dividend of 2.5p per Share in respect of the six months ending 30 June 2015, which will be payable in or around September 2015 and an interim dividend of 2.5p per Share in respect of the six months ending 31 December 2015, making a total of 5p per share for the 2015 calendar year, which on the basis of the current NAV would represent a dividend yield of approximately 3.3 per cent. At the time of the declaration of any future dividend, the Board will take account of the accumulated retained earnings as well as the unrealised gains and losses at the time.
Before recommending any dividend, the Board will also consider the capital and cash position of the Company and the impact on such capital and cash by virtue of paying that dividend. Before paying any dividend, the Board must resolve and certify that the Company will, immediately after payment, satisfy the solvency test prescribed by Guernsey Company law.
The projected dividends set out above are intentions only and do not comprise profit forecasts. There can be no assurance that these intentions can or will be met and they should not be seen as an indication of the Company’s expected or actual results or returns. Accordingly investors should not place any reliance on these intentions in deciding whether to invest in or acquire Shares nor assume that the Company will make any distributions at all.