Final Results

RNS Number : 8118D

Crystal Amber Fund Limited

19 September 2008

 



19 September 2008

Crystal Amber Fund Limited

('Crystal Amber' or 'the Company')

Final results for the period ended 30 June 2008

The Company announces its final results for the period from 22 June 2007 (the date of the Company's incorporation) to 30 June 2008.

Highlights:

• Successful launch of the fund on 17 June 2008 on both AIM and CISX, raising £57 million net of expenses;

• Cautious approach to initial investments avoided market falls during first month of operation;

• 80 per cent of the Company's assets held in cash as at 31 August 2008;

• Market value of investments more than £1.5 million in excess of cost at 31 August 2008;

• First steps taken to engage with management and boards of portfolio companies;

William Collins, Chairman, commented:

'We have made a good start. Our caution in extremely turbulent markets has been the right approach and will continue.'

Enquiries

Crystal Amber Fund Limited
William Collins	Tel: [phone]
John East & Partners Limited
Bidhi Bhoma	Tel: [phone]

  CHAIRMAN'S STATEMENT

I am pleased to present the first annual report of the Company which covers a period from 22 June 2007 (date of incorporation of the Company) to 30 June 2008. On 17 June 2008, the Company was admitted to trading on AIM and the Channel Islands Stock Exchange ('CISX'). During the period no investments were made and in order to give investors as full a picture as possible at this stage, the Board has decided to give a brief account of the Company's trading subsequent to 30 June 2008.

The market background since launch could scarcely have been less promising. In the first month of the Company's operation after its listing, the main UK market indices fell sharply with the FTSE 250 Index, which contains many of the companies in our target area, declining by more than 13 per cent. In this environment, the Company adopted a cautious approach. At 30 June 2008, the funds received by the Company from the flotation, amounting to approximately £57 million net of issue costs, were held entirely in cash. Subsequently, as Crystal Amber Advisers (UK) LLP ('Investment Adviser') identified opportunities, initial investments were made, while maintaining a careful and highly selective approach. At the end of August 2008, approximately £12 million, or 21 per cent. of the float proceeds, had been invested in or committed to a total of eleven companies which were deemed to have met the Company's investment criteria. At 31 August 2008, the market value of the Company's investments were more than £1.5 million in excess of their cost.

Although the Company's approach is to achieve growth in the value of its investments over a medium term time horizon, the opportunity has been taken to realise some investment gains during the recent period of market volatility.

The Company intends to engage with the boards and management of investee companies as outlined in our admission document and, whilst it is still very early days, the first steps have been taken, with initial contact established with five of the companies in the portfolio.

In selecting stocks for investment, close attention is being paid to underlying value and the potential to realise it. Dividend income and its sustainability are also being examined closely.

Amid increasing signs of recession in the UK and instability in the global economy, the market outlook remains uncertain.  The Board has reviewed the Company's liquid assets to ensure that they are protected. Current extreme turbulence makes it all the more important to invest with discipline and caution, in line with the approach set out in our admission document. Our experience so far, while brief, encourages the belief that the Company can identify and realise value for our investors.

William Collins

Chairman

  INVESTMENT MANAGER'S REPORT

The financial turbulence that has buffeted global stock markets since mid-2007 showed little sign of easing after the Company was admitted to trading on AIM and CISX on 17 June 2008. The banking and financial sectors in particular came under renewed pressure.  Oil and mining stocks offered some support to the FTSE 100 but the associated rises in energy and raw material costs have pushed inflation higher and delayed a fall in interest rates.  

In the first month following the Company's admission to AIM and CISX, the FTSE 100 index fell 8 per cent. and the FTSE 250 index, which contains many of the companies in our target area, fell more than 13 per cent. The main market indices remain well below their level on 17 June 2008, when the Company made its debut on AIM and CISX.  At the end of August 2008 the FTSE 100 was 4 per cent. lower and the FTSE 250 about 3.5 per cent. lower.  

Against this background, our decision was to proceed with considerable caution. 

At the end of the period, less than two weeks after the Company's AIM and CISX launch, virtually the entire £57 million net proceeds of the float were held in cash. Over the first month of the Company's quoted life, five investments totaling £1.4 million were recommended by the Investment Adviser and duly made. At that point, more than 97 per cent. of the Company's resources remained in cash.  

Over the summer, as the Investment Adviser progressively identified opportunities, the pace of recommendations increased. The overall approach remained cautious and selective.

At the end of August 2008, approximately £9.6 million, representing 17 per cent. of the float proceeds, had been invested in ten companies. Including commitments to take up future share issues, the total committed was £12 million or 21 per cent. in eleven companies. We are pleased to note that, as at 31 August 2008, the market value of investments was more than £1.5 million in excess of cost.  

In considering recommendations from the Investment Adviser, close attention is paid to dividend income  and its sustainability. The Investment Adviser recognises that, in current markets, yield levels have already come under pressure and this is likely to continue.  Nonetheless we expect a useful income stream from the investments as they now stand.  

Investments are made with a time horizon that allows for value to be realised but the gains on two investments to date encouraged us to take some profits during the recent period of market volatility.

While it is too early to give a reliable overview of a portfolio that is still being assembled, we have so far made investments in the retail, engineering, media, food services, oil services and business services sectors. The Company's only holding in the financial sector to date is in an area where the investment is amply covered by the underlying asset value. It is too early to discuss our investments in detail but to explain our approach in making investments, it may be helpful to give an example:

N BROWN GROUP is a long established and recognised home shopping group whose origins go back to 1859. It has been quietly building up a highly successful online business which has 47 websites and has grown from 4 per cent. of N Brown's total sales five years ago to over 30 per cent. at present, with projections for a further increase. Our analysis suggested the value of the online business was not fully recognised by the market in valuing the overall group, and we received a recommendation from the Investment Adviser to make an investment in N Brown. Taking advantage of weak markets, a position was built quickly.  The share price subsequently strengthened to such an extent that, although our focus is on the long term potential, we decided to realise some of our gains. The dealing profit which was duly booked effectively pays for our present holding.   

Our approach remains focused on building long term value but, in volatile markets, we aim to take advantage when there are opportunities to realise attractive gains.

Net asset value

The net asset value at 30 June 2008 was  95.02p per share. The next valuation date is 30 September 2008.  

Engagement

The Company is ready, as laid out in the admission document, to engage with management and boards of investee companies and, where necessary, to take steps to assist the realisation of value. In the first two months of our operation, the focus has been on building the portfolio at a cautious and prudent rate. Initial contacts have been established with the management of five of the investee companies. Further engagement is planned.  

Market outlook

Financial markets, and particularly the banking sector, are experiencing extreme turbulence. At the request of the Company's board, we have taken steps to ensure that the Company's liquid assets are protected.  

The outlook for the UK stock market remains difficult. The performance of the FTSE 100 index was helped, for most of the period, by the inclusion of major international oil and mining groups, whose shares have benefited from high oil and metal prices.  The FTSE 250 reflects the performance of UK companies more closely.  Our focus, as spelt out in the Company's admission document, is on the mid-cap area which typically includes stocks with a market value of between £100 million and £1 billion, where our analysis detects value and where we believe this value can be realised by engagement with the board and management.  

In the first months of our operation, the turbulence of stock markets has been increased by the pressure of margin trading and short selling. In these conditions, we are striving to ignore the 'white noise' and make a calm and reasoned judgment.  

One feature of current conditions is that short term price falls are throwing up some attractive value opportunities.  We aim to be alert to these opportunities. Our experience so far, though brief, gives us confidence that, though markets are likely to remain challenging, our approach can find and deliver value for the Company's shareholders.

Crystal Amber Asset Management (Guernsey) Limited

Investment Manager  

INCOME STATEMENT

For the period from 22 June 2007 to 30 June 2008

	Notes	£	£
Income
Interest			74,906
Expenses
Directors' fees		76,658
Management fees	9	17,533
Audit fees		6,000
Administration fees	9	2,877
Other expenses		4,388
			107,456
Loss for the period			(32,550)
Basic and diluted loss per share attributable to the
equity-holders of the Company during the period (pence)	3		(0.05)

All items in the above statement derive from continuing operations.

  BALANCE SHEET

as at 30 June 2008

	Notes
		£
ASSETS
Current assets
Trade and other receivables	4	2,553,225
Cash and cash equivalents	5	54,616,689
Total assets		57,169,914
LIABILITIES
Current liabilities
Trade and other payables	6	155,203
Total liabilities		155,203
EQUITY
Capital and reserves attributable to the Company's equity
shareholders
Share capital	7	600,000
Share premium	8	56,447,261
Accumulated loss		(32,550)
Total equity		57,014,711
Total liabilities and equity		57,169,914
Net asset value per share (pence)	3	95.02

  STATEMENT OF CHANGES IN EQUITY

For the period from 22 June 2007 to 30 June 2008

	Notes	Share Capital	Share Premium	Accumulated Profit / (Loss)	Total
		£	£	£	£
Opening balance at 22 June 2007		-	-	-	-
Share capital issued	7	600,000	59,400,000	-	60,000,000
Share issue expenses	8	-	(2,952,739)	-	(2,952,739)
Loss for the period		-	-	(32,550)	(32,550)
Balance at 30 June 2008		600,000	56,447,261	(32,550)	57,014,711

  CASH FLOW STATEMENT

For the period from 22 June 2007 to 30 June 2008

	Notes	£
Cashflows from operating activities
Loss for the period		(32,550)
Finance income - interest		(74,906)
		(107,456)
Increase in trade and other payables		104,400
Increase in trade and other receivables		(16,244)
Net cash outflow from operating activities		(19,300)
Cashflows from financing activities
Proceeds from issuance of Ordinary Shares	4	57,537,925
Share issue expenses	8	(2,901,936)
Net cash inflow from financing activities		54,635,989
Increase in cash and cash equivalents		54,616,689
Cash and cash equivalents at beginning of period		-
Cash and cash equivalents at end of period		54,616,689

  NOTES TO THE REPORT AND ACCOUNTS

1.    BASIS OF PREPARATION

The financial statements of the Company have been prepared under the historical cost convention and in accordance with IFRS. The financial statements are presented in Sterling, the Company's functional currency.

The financial information set out in this preliminary announcement does not constitute statutory accounts for the period ended 30 June 2008.

The financial information for the period ended 30 June 2008 is extracted from the Company's financial statements to that date which received an unqualified auditor's report and will be filed with the [Registrar of Companies] in due course.

2.    TAXATION

Guernsey taxation

The Company is exempt from taxation in Guernsey under the provisions of the Income Tax (Exempt Bodies) (Guernsey) Ordinances, 1989 and is charged an annual exemption fee of £600.

In response to the review carried out by the European Union Code of Conduct Group, the States of Guernsey has abolished exempt status for the majority of companies with effect from January 2008, and has introduced a zero rate of tax for companies carrying on all but a few specified types of regulated business. Because collective investment schemes, such as the Company, were not one of the regimes classified as being harmful they will continue to be able to apply for exempt status for Guernsey tax purposes after 31 December 2007.

3.    BASIC AND DILUTED EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE

Basic and diluted earnings per share is based on the following data:

	22 June 2007 to 30 June 2008
	£
Loss per income statement	(32,550)
Issued average number of Ordinary Shares	60,000,000
Basic and diluted earnings per share (pence)	(0.05)

Net asset value per share is based on the following data:

	30 June 2008
	£
Net asset value per balance sheet	57,014,711
Number of Ordinary shares outstanding	60,000,000
Net asset value per share (pence)	95.02

4.    TRADE AND OTHER RECEIVABLES

At the balance sheet date trade and other receivables includes amounts receivable from investors for subscriptions for Ordinary Shares of £2,462,075. At 30 June 2008 £57,537,925 had been received by the Company in respect of subscriptions.

There are no past due or impaired receivable balances outstanding at the year end.

5.    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 are analysed as follows:

	30 June 2008
	£
Cash available on demand	24,616,689
Cash on deposit with maturities of less than 90 days	30,000,000
	54,616,689

Cash available on demand earns interest at a rate based on the bank call deposit rate while short-term placements earned interest ranging from 5.10% to 5.17% during the period.

6.    TRADE AND OTHER PAYABLES

Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. The credit period taken for trade purchases is less than 30 days. The carrying amount of trade payables approximates to their fair value.

7.    SHARE CAPITAL

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 benefits for other stakeholders 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 to reduce debt.

Externally imposed capital requirement

There are no capital requirements imposed on the Company.

The authorised share capital of the Company is 300 million Ordinary shares of £0.01 each.

The issued share capital of the Company is comprised as follows:

	30 June 2008
	Number	£
Allotted, called up and fully paid Ordinary shares of £0.01 each	60,000,000	600,000

8.    SHARE PREMIUM AND SHARE ISSUE EXPENSES

Share issue expenses amounted to £2,952,739 which have been deducted from the share premium account. The Company has passed a special resolution cancelling the amount of £56,447,261 standing to credit of the share premium account and transferring this to a distributable reserve. This was approved by the Royal Court of Guernsey on 18 July 2008.

9.    RELATED PARTIES

Mark Huntley, director of the Company, is also a director of the Company's administrator, Heritage International Fund Mangers Limited. During the period the Company incurred administration fees of £2,872 all of which was outstanding at the period end. Mark Huntley also received a Director's fee of £12,219 all of which was outstanding at the period end.

Richard Bernstein is director of the Investment Manager and also a shareholder of Company. During the period the Company incurred management fees of £17,533 all of which was outstanding at the period end.

All related party transactions are carried out on an arms length.

10.    DIVIDENDS

No dividends were paid or are proposed in respect of the period ended 30 June 2008.

11.    COPIES OF THE REPORT AND ACCOUNTS

Copies of the Report and Accounts will be posted to shareholders shortly and will be available from the Company's registered office at Polygon Hall, Le Marchant Street, St. Peter Port, Guernsey GY1 4HY and on its website www.crystalamber.com. 

 

END

 

 

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