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 September 2017 was 203.15 pence (31 August 2017: 191.79 pence per share).
The proportion of the Fund’s NAV at 30 September 2017 represented by the ten largest holdings, other investments and cash (including accruals), was as follows:
|Top ten holdings||Pence per share||Percentage of investee equity held|
|Hurricane Energy plc||52.2||8.0%|
|STV Group plc||20.7||14.4%|
|FairFX Group plc||18.9||16.5%|
|Leaf Clean Energy Co.||13.2||29.9%|
|NCC Group plc||12.9||2.1%|
|Ocado Group plc||9.7||0.5%|
|Sutton Harbour Holdings plc||7.3||29.3%|
|GI Dynamics Inc||7.1||46.6%|
|Johnston Press plc||3.0||21.2%|
|Total of ten largest holdings||175.6|
|Cash and accruals||6.4|
Investment Adviser’s commentary on the portfolio
Over the quarter to 30 September 2017, NAV per share decreased by 0.6 per cent. Taking into account the 2.5p dividend paid over the period, the Fund’s NAV returned a positive 0.6 per cent. The top contributors to NAV growth over the quarter to 30 September 2017 were FairFX Group plc (1.8 per cent) and NCC Group plc (1.8 per cent). Top detractors were GI Dynamics Inc (-1.2 per cent) and STV Group plc (-0.4 per cent).
Hurricane Energy plc (“Hurricane”)
During the quarter, Hurricane finalised a $530 million fundraising for its Early Production System (“EPS”) at Lancaster. The company is now fully funded and on track to achieve ‘first oil’ at Lancaster in the first half of 2019.
In September 2017, Hurricane announced that it had taken the final investment decision on its EPS. The floating production, storage and offloading vessel, which will form the basis of the development, arrived in Dubai to be upgraded and Hurricane received approval from the regulatory authorities for its field development plan.
Despite operational progress, Hurricane’s share price was weak over the period, which the Fund believes was due to the poor handling of the fundraising. The Fund maintains the view that the way the company has gone about the recent fundraisings has created a significant disconnect between the share price and the asset value. The Fund is engaging with the Hurricane Board to improve the company’s governance and to release value.
Drilling results over the last 12 months indicate that Hurricane holds a very large, quality asset, with a resource that the Fund believes could be in excess of 1.6 billion barrels of oil.
FairFX Group plc (“FairFX”)
During the quarter, FairFX announced the acquisition of CardOne, a digital business banking and current account group, for £15 million. The company completed a £25 million fundraising at 58p per share to fund the acquisition. CardOne’s functionality will enable FairFX to improve its offering for small and mid-cap businesses.
Following investment demand and a strong share price, the Fund has trimmed its shareholding but remains excited by FairFX’s prospects.
Over the quarter, FairFX’s share price increased by 22.2 per cent.
NCC Group plc (“NCC”)
During the quarter, NCC presented the results of its strategic review confirming its intention to continue ownership of the Escrow and Assurance divisions and outlining plans to improve the organisation’s effectiveness in serving its clients and delivering for shareholders.
With legacy investments written-down, the Fund believes that the company is well positioned to return to profitability. The Fund believes NCC’s markets are high growth, reinforced by the fact that in July 2017, the company reported 17 per cent growth in group revenues over the year to 31 May 2017, to £244.5 million (2016: £209.1 million).
In September 2017, NCC announced that it had hired three of the Bank of England’s cyber specialists to lead a newly established threat assurance unit. These appointments prove NCC’s confidence in the outlook for its consulting services.
The Fund believes NCC’s new management team has ‘steadied the ship’ following a string of profit warnings and we remain engaged with the management team to support it through the next phase of restructuring.
NCC’s share price increased by 32.2 per cent over the quarter.
Leaf Clean Energy Co. (“Leaf”)
During the quarter, the Fund completed an unsecured loan note investment in Leaf of $1 million. This facility will support the company’s ongoing litigation with Invenergy. The Delaware Court has scheduled a trial for 25-27 October 2017 to determine the amount of Leaf’s damages. The company is seeking net $122.2m in damages from Invenergy, which compares to Leaf’s market capitalisation at 30 September 2017 of £44.8m (c.$59.0m) and its latest available NAV at 30 June 2017, of $88.3m.
STV Group plc (“STV”)
During the quarter, STV commenced its buyback programme, which was requested by the Fund. As the market continues to undervalue STV’s shares, we are satisfied that by repurchasing its own stock, STV is creating long term value for shareholders.
GI Dynamics Inc (“GID”)
During the quarter, the company continued to work with its notified body, SGS, to address the issues that resulted in the suspension of its CE Mark.
Additional clinical evidence was presented at the European Association for the Study of Diabetes conference in Lisbon, which reported 12 months post explant data from the NHS demonstrating the ongoing benefits of Endobarrier post removal of the device.
The Fund continues to work closely with GI Dynamics’ management and board to fully capitalise on what the Fund believes is a world-class technology, addressing an unmet clinical need.