Monthly Net Asset Value

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

10 April 2017
 

CRYSTAL AMBER FUND LIMITED
(“Crystal Amber Fund” or the “Fund”)

Monthly Net Asset Value

Crystal Amber Fund announces that its unaudited net asset value (“NAV”) per share at 31 March 2017 was 241.49 pence (28 February 2017: 231.52 pence per share). 

The proportion of the Fund’s NAV at 31 March 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	81.1	11.7%
Northgate plc	33.1	4.4%
Grainger plc	31.4	3.0%
STV Group plc	21.4	14.2%
Leaf Clean Energy Co.	13.7	29.9%
FairFX Group plc	13.6	25.9%
GI Dynamics Inc	8.8	40.6%
Sutton Harbour Holdings plc	7.2	29.3%
NCC Group plc	6.1	1.6%
Johnston Press plc	4.6	21.4%
Total of ten largest holdings	221.0
Other investments	23.5
Cash and accruals	(3.0)
Total NAV	241.5

Investment Adviser’s commentary on the portfolio

Over the quarter to 31 March 2017, NAV per share increased by 10.8 per cent.

The top three positive contributors to NAV growth over the quarter to 31 March 2017 were Hurricane Energy plc (5.1%), GI Dynamics (2.5%) and FairFX Group (2.1%). 

Hurricane Energy plc (“Hurricane”)

During the quarter, Hurricane continued to de-risk its assets, confirming a 670m oil column at Lancaster and announcing another significant oil discovery at its Halifax well. 

In March 2017, Hurricane announced that oil at Halifax was of a similar quality to that encountered at Lancaster and was found at even greater depth, indicating that Lancaster and Halifax could form one large structure. Current estimates based on the size of the oil column at Halifax indicate that it could hold in the region of 400 million barrels of oil, with analysts suggesting this could take Hurricane’s contingent resource base to over 1.6 billion barrels. If Halifax and Lancaster are found to be a single accumulation, there is potential for the resource for these assets alone, to exceed 1 billion barrels of recoverable oil.

During the quarter, the Oil and Gas Authority announced the results of an offshore licensing round, which saw majors, BP and Shell, secure three licenses adjacent to those held by Hurricane, validating Hurricane’s activities in the region.     

The Fund regards Hurricane’s recent drill results as extremely encouraging.  We look forward to the imminent release of the Competent Person’s Report and the continuation of farm-out discussions with potential partners. 

Over the quarter, Hurricane’s share price increased by 14.1 per cent. The Fund reduced its position into demand to manage its exposure to this successful investment. At the quarter end, the Fund’s shareholding (excluding its warrants) represented 33.6 per cent of NAV. 

GI Dynamics Inc (“GI Dynamics”)

During the quarter, the Fund announced on 10 February 2017 that it had acquired 16.1 per cent of the issued Chess Depository Interests (“CDI”) in GI Dynamics, taking the Fund’s stake in the company to 38.7 per cent. 

GI Dynamics is the developer of EndoBarrier, the first minimally invasive device therapy approved for the treatment of type 2 diabetes and obesity. EndoBarrier is a temporary bypass sleeve that is endoscopically delivered to the duodenal intestine, offering similar effects to the surgical gastric bypass. It is CE mark approved and commercially available in Europe and a number of countries outside of the United States.

Founded in 2003, GI Dynamics is headquartered in Boston, Massachusetts. It listed in September 2011 on the Australian Stock Exchange, with a share price of AU$1.10 and market capitalisation of AU$300 million. Following what the Fund considers to be several operational failures by previous management, including a terminated FDA trial, GI Dynamics’ share price stood at 7¢ at the quarter end, valuing the company at AU$38.2 million, approximately £23.2 million. Shareholders since listing include Johnson & Johnson and Medtronic Inc.

Since launch, the EndoBarrier therapy has been used in over 3,500 patients worldwide. Multiple independent studies support its safety and efficacy in reducing weight, HbA1c (blood glucose) levels and the need for insulin and other prescribed medications. EndoBarrier stands as a minimally invasive alternative to bariatric surgery and pharmacotherapy, which have well documented side effects and safety issues. The wide prevalence of type 2 diabetes and obesity present a potentially vast market opportunity expected to reach 355 million patients in 2030.

The Fund supports the current management’s strategy to commercialise the device in Europe, initiate a new FDA trial and continue to gather clinical data. This would build on 2016’s successes, including the 300 patient UK trials led by the Association of British Clinical Diabetologists (“ABCD”) and the data announced from the German registry, which included 243 patients. The company has achieved partial reimbursement in Germany (NUB status 1) and Israel and has received preliminary reimbursement codes in Holland and Switzerland.

The Fund believes that GI Dynamics has a world class technology, addressing an unmet clinical need, with its current share price a function of shareholder disillusionment resulting from past management disappointments.

The Fund, in conjunction with its Investment Adviser, is now working with the GI Dynamics board to fully capitalise on what the Fund believes is GI Dynamics’ highly scalable potential.

The Fund continued to grow its stake over the quarter, ending the period with a 40.6 per cent stake. 

Over the quarter, GI Dynamics’ share price increased by 204 per cent. 

FairFX Group plc (“FairFX”)

During the quarter, FairFX released a positive trading statement, highlighting strong growth, accelerating in the second half of 2016. Turnover for 2016 exceeded expectations and was up 27 per cent on 2015. Total turnover in the second half of the year was 45 per cent ahead of the same period in 2015 and the corporate platform saw exceptionally strong growth, with turnover up 98 per cent on the previous year.

In January 2017, FairFX announced the acquisition of an e-money license, which could enable the company to issue its own cards and reduce its cost base.

Over the quarter, FairFX’s share price increased by 50 per cent. The Fund believes that there is significant scope for further share price appreciation. 

For further enquiries please contact:

Crystal Amber Fund Limited
William Collins (Chairman)
Tel: [phone]
www.crystalamber.com

Allenby Capital Limited - Nominated Adviser
David Worlidge/James Thomas
Tel: [phone]

Winterflood Investment Trusts - Broker
Joe Winkley/Neil Langford
Tel: [phone]

Crystal Amber Advisers (UK) LLP – Investment Adviser
Richard Bernstein
Tel: [phone]